TCS on Sale removed | TCS New Rates from 1 April 2025

Summary

This video discusses important updates to Tax Collected at Source (TCS) set to take effect on April 1, 2025, following the 2025 Budget. Key changes include the removal of TCS on high-value goods sales over ₹50 lakh, as well as foreign educational remittances involving loans. The TCS limit for foreign remittances has been increased to ₹10 lakh, and the timber TCS rate has been reduced. Additionally, higher TCS rates for non-filers are abolished, and provisions for delayed TCS payments have been clarified, offering relief to taxpayers and businesses. The video also promotes practical courses for enhancing tax knowledge and career growth.

Takeaways

• 😀 TCS (Tax Collected at Source) is applicable to certain transactions, like purchasing goods above ₹10 lakh, where 1% TCS is collected on the sale amount.
• 😀 Significant changes in TCS provisions will come into effect from April 1, 2025, with some sections being removed or revised.
• 😀 TCS on sales of goods under Section 206C(1H) will be removed, providing relief to businesses that frequently handle high-value transactions exceeding ₹50 lakh.
• 😀 TCS on foreign remittances for educational purposes (LRS) has been withdrawn, offering relief for individuals sending money abroad for education or paying foreign education loans.
• 😀 The limit for TCS exemption on foreign remittances for general purposes (LRS) has increased from ₹7 lakh to ₹10 lakh, starting from April 1, 2025.
• 😀 TCS rates for timber obtained by any mode other than from forest produce have been revised from 2.5% to 2% from April 1, 2025.
• 😀 The provision of higher TCS/ TDS rates for non-filers of income tax returns has been removed, simplifying compliance for taxpayers.
• 😀 From April 2025, compliance checks for higher TDS/TCS rates will no longer require verification of income tax return (ITR) filing, just the PAN of the person.
• 😀 Relief has been provided regarding prosecution for delay in depositing TCS with the government, as no prosecution will be initiated for minor delays in quarterly TCS filings.
• 😀 For those interested in furthering their knowledge or career, the website offers practical courses related to GST, income tax, accounting, automation, and more.

Q & A

What is TCS (Tax Collected at Source)?

TCS stands for Tax Collected at Source, where the seller collects a certain percentage of tax from the buyer at the point of sale. For example, when purchasing a car worth more than 10 lakh rupees, the seller collects 1% TCS from the buyer.

What significant change is being introduced regarding TCS on sales of goods?

The government is removing TCS on the sale of goods exceeding 50 lakh rupees from **April 1, 2025**. This means that businesses no longer have to collect TCS on large sales, which eliminates compliance issues.

Why was TCS on sale of goods problematic for businesses?

The issue arose because both TCS on sales and TDS on purchases could apply simultaneously. It was difficult to track whether TDS had already been deducted during the purchase, leading to compliance challenges.

How does the removal of TCS on educational foreign remittances benefit taxpayers?

Previously, foreign remittances for educational purposes were subject to a 0.5% TCS if the amount exceeded 7 lakh rupees. From **April 1, 2025**, TCS on such remittances will be removed, providing relief to parents sending money for their children's education abroad, especially when using education loans.

What is the new limit for TCS on Liberalized Remittance Scheme (LRS) transactions?

The government has raised the limit for TCS on foreign remittances under the Liberalized Remittance Scheme (LRS) from 7 lakh rupees to 10 lakh rupees. Starting **April 1, 2025**, no TCS will be collected for transactions under this limit.

What is the change in the TCS rate for timber?

The TCS rate for timber obtained by methods other than forest produce is reduced from 2.5% to 2% starting **April 1, 2025**.

How does the removal of higher TDS/TCS for non-filers benefit taxpayers?

Previously, individuals who did not file their Income Tax Returns (ITR) were subject to higher TDS/TCS rates, often up to 20%. With the removal of this provision, taxpayers will no longer need to check whether someone has filed their ITR when collecting TCS or TDS.

What change was made regarding the prosecution for delayed TCS payments?

Previously, delayed TCS payments could lead to prosecution, imprisonment, and fines. However, with the recent changes, **no prosecution** will be initiated for minor delays in filing quarterly TCS statements under **Section 206C(3)**, providing relief to taxpayers.

When will the changes in TCS provisions be effective?

The changes in TCS provisions, including the removal of TCS on sales of goods and certain foreign remittances, will be effective from **April 1, 2025**.

How does the change in TCS provisions affect business owners and taxpayers?

The changes bring significant relief to businesses, especially those involved in large sales or foreign remittance transactions. The removal of redundant provisions and increased limits make compliance easier and reduce tax-related complications for business owners and individuals alike.