TDS and TCS: Apart from making income up to Rs 12 lakh tax free, Finance Minister Nirmala Sitharaman has also made some announcements regarding TDS and TCS in the budget. But to understand how you will benefit from this, you will first have to understand TDS and TCS.
TDS and TCS: Finance Minister Nirmala Sitharaman has given a big gift to the middle class people by making income up to Rs 12 lakh tax free in Budget 2025. Not only this, she has also made some announcements regarding TDS and TCS. In the budget, the limit of deduction on interest for the elderly has been doubled. It has been increased from Rs 50,000 to Rs 1,00,000. Apart from this, the annual limit for TDS on rent has been increased from Rs 2.40 lakh to Rs 6 lakh.
At the same time, Sitharaman has proposed to increase the limit of collecting ‘Tax at Source’ (TCS) under RBI’s Liberalized Remittance Scheme (LRS). The Finance Minister has proposed to increase the limit of TCS from Rs 7 lakh to Rs 10 lakh. Let us tell you that till now 5% TCS had to be paid for sending more than Rs 7 lakh for education and medical treatment. However, if money is sent through education loan, then no TCS is charged. But now if you send Rs 10 lakh for the fees or other expenses of your children studying abroad, then you will not have to pay tax. The Finance Minister has also proposed to remove TCS on remittance in matters related to education.
What is LRS
When you transfer money abroad for remittance, travel and investment under the LRS i.e. Liberalized Remittance Scheme, you have to pay TCS on it. This tax is deducted by the bank or remittance service before sending the money abroad.
Now understand what is TDS
TDS means Tax Deduction at Source. If a person earns any income, then tax is deducted from that income and the remaining amount is given. This is called TDS. TDS is deducted on different types of income sources such as salary, interest or commission received on any investment etc. The government collects tax through TDS. TDS deducted from all income sources is deposited with the government. In return, you also get a certificate in which it is told how much TDS was deducted from a particular person and how much amount went into the government account.
If TDS is more than the income tax, a refund is claimed and if it is less, advance tax or self-assessment tax has to be deposited. The responsibility of depositing TDS in the government account lies with the person making the payment or the institution that is making the payment. Those who deduct TDS are called deductors. The person who gets the payment after deducting the tax is called the deductee.
What is TCS?
TCS means Tax Collected at Source. TCS is paid by the seller, dealer, vendor, shopkeeper. However, he collects it from the buyer or customer while selling any goods. While taking the price of the goods, the tax amount is also added to it. After collecting it, it is the job of the seller or shopkeeper to deposit it. TDS is levied on special types of goods like liquor, tendu leaves, timber, scrap, minerals etc.
