With this amendment, it may be inferred that various such individuals will now have the option to claim TCS credits against tax liabilities. Thus, it will prove particularly advantageous for individuals encountering expenses pertaining to overseas travel and education.
Key Highlights of the Amendment
TCS Credit for Minors
|
Parents will now be able to claim TCS credits for payments made for minors.
|
Ease of Claiming TCS
|
New rules are designed to streamline the process for salaried individuals, making it easier to claim credits for TCS with their employers thereby reducing the time for getting IT refund s
|
|
Reduction in Compliance Burden
|
The amendments are expected to reduce compliance burdens, making it less cumbersome for employees to file their returns and claim appropriate credits.
|
Claiming the TCS Credits
üThe amended tax regulations now permit a different individual to accumulate the TCS Credit, apart from the original payer. This reform will enable parents or legal guardians, who have paid TCS for their children’s tuition fees abroad, to transfer the credit to their own tax returns.
üWith this move, it will now provide flexibility to lessen the financial burden on families.
According to the regulation, the tax is collected at source on the overseas remittance as follows:
|
Type of Remittance
|
Less than 7 Lakh
|
More than 7 Lakh
|
|
Education or Medical expenses via a Education Loan
|
Nil
|
0.5%
|
|
Education or Medical expenses from any other source of income
|
Nil
|
5%
|
|
Overseas Tour Package
|
5%
|
20%
|
|
Any other Purpose
|
Nil
|
20%
|
This enables employees to claim tax collected for their overseas tour package and reduce the TDS burden on their salary instead to wait for the filling of the income tax return that happens only next year.
How can one claim the TCS Credit?
The collectee who made the payment must provide a declaration to the tax collector (such as a bank or institution collecting the TCS). This declaration should specify that the credit should be applied to another person's PAN.
Introduction of new Form 12BAA
In the lieu of the above amendment, CBDT has unveiled a new Form 12BAA as per notification No. 112/2024 dated 15th October 2024, designed for the reporting of non-salary income and the inclusion of TCS details. These forms, aligned with the directives specified in the Union Budget 2024, will streamline the process of offsetting TDS and TCS amounts collected from sources other than salary against the TDS on salary.
The Form 12BAA is a statement that outlines specific details for sub-section (2B) of section 192. Employees must utilize this newly introduced form to notify their employers of any deductions made from income obtained from sources other than their salaries. These sources may encompass revenue from fixed deposits, commission from insurance policies, dividends from equity investments, or taxes levied during the acquisition of goods or services like vehicles or foreign currency.