The Finance Bill 2020 has proposed an modification to Section 206C to levy 5 per cent tax assortment at supply (TCS) on abroad remittance and for the sale of abroad tour package deal.
In an announcement on Friday, the Ministry of Finance stated, “The government imposed a tax collection at source (TCS), akin to TDS on remittances after an internal survey by the income tax department which showed that not only year-on-year more and more money is being sent under LRS but also a large number of those sending out money had not filed income tax returns.”
“Of the 5,026 sample cases of foreign remittance surveyed, it was found that 1,807 did not file returns. In the FY 2018-19, $14 billion were sent out using the liberalised remittance scheme. However, in 2009- 2010, the LRS remittances were less than USD 1 billion. Also, as per the findings of the sample survey, no returns were filed for around 24 per cent of the amount sent by these 5026 remitters,” the assertion stated.
Revenue Secretary Dr Ajay Bhushan Pandey stated, “Contrary to misinterpretation in a certain section of media, 5 per cent TCS on foreign remittance is not an additional or new tax”.
“It is like TDS which you can adjust against your total income tax liability. This move is to make remitter file income tax return. We have data that shows many persons who transferred funds abroad under this scheme did not file income tax returns. Normally people remitting big amounts should be in income tax bracket and paying income taxes,” stated Dr Pandey.
One can get his or her month-to-month TDS decreased if he or she is a salaried particular person or modify in opposition to advance tax fee when the subsequent occasion falls due, the Revenue Secretary stated.
Giving a background, the assertion stated, “Under the liberalised remittance scheme, individuals are allowed to send out $250,000 in a year. Once the Finance Bill is passed, a 5 per cent TCS will be levied on such foreign remittance.”
According to the funds provision, any authorised seller receiving an quantity or an mixture of quantities of seven lakh rupees or extra in a monetary 12 months for remittance out of India below the scheme is required to deduct 5 per cent TCS, the assertion stated.
In circumstances the place such remittances not supported by PAN or Aadhaar, the TCS price could be 10 per cent. This TCS may be adjusted in opposition to the ultimate tax legal responsibility of the particular person and is designed to get such individuals to file tax returns.
The Enforcement Directorate (ED) has come throughout plenty of circumstances during which the liberalised remittance scheme was utilized by commodity merchants to hold out a hawala operation within the Middle East.
There have even been situations of misuse of this window to ship cash greater than the permissible restrict. TCS will enable for higher monitoring and permits the division to at the very least gather some tax on these transactions. If an individual doesn’t file return, the federal government would get to maintain this 5 per cent quantity.
Section 206C offers with tax assortment at supply and the federal government is steadily widening its ambit to incorporate extra transactions. The 2016 funds had imposed one per cent TCS on the acquisition of automobiles costing over Rs 10 lakh. This was performed to make sure that those that are buying pricey automobiles shouldn’t get away with out disclosing their actual revenue and paying revenue tax. (ANI).