Tax Deduction: In a recent development, the government is actively working towards linking the tax deduction (TDS) made at the source of an individual’s income with the tax collection at source (TCS) for payment purposes. This information has been provided by a senior officer.
Typically, TCS refers to the tax levied by a seller during the sale of goods or services. On the other hand, TDS is the tax imposed by the government itself.
20 Percent Implementation
The government’s plan to link Tax Collection at Source (TCS) with Tax Deduction at Source (TDS) aims to ensure minimal impact on the cash flow of individual taxpayers. This initiative has gained prominence as the system of implementing a 20 percent TCS on overseas spending exceeding a specific limit is set to commence from July 1st.
Insights from the Chief Economic Advisor
Chief Economic Advisor, Ananth Nageswaran, has informed that transactions up to Rs 7 lakh have been exempted from TCS, providing relief to small taxpayers. As a result, the majority of transactions will not be subject to the 20 percent TCS.
Maintaining TDS Connection
Nageswaran has defended this approach, emphasizing that the government intends to establish a linkage between TDS and TCS. The aim is to ensure that if TCS is applied, it should result in a reduction of TDS. The primary objective of this endeavor is to prevent any significant impact on your cash flow.
Relief through the New System
During a recent program organized by the Confederation of Indian Industry (CII), Nageswaran mentioned that taxpayers experiencing difficulties due to discrepancies between TCS and TDS will find relief through the implementation of the new system.