Several key direct and indirect tax changes will kick in from 1 October that businesses and individual taxpayers need to take note of. These are provisions meant to gather data about transactions, spending patterns and fund flow across borders as the tax administration increasingly becomes data and tech-driven. Mint takes a look at the changes.
A 5% tax collected at source (TCS) will be applicable on funds sent abroad, subject to riders. This will cover any amount sent abroad to buy foreign tour packages as well as every other amount above ₹7 lakh sent abroad unless it is from an income that is already tax-deducted at source (TDS). Bankers would be liable to collect TCS and remit to the government; therefore, the incidence of TCS is on the remitter, said Sandeep Jhunjhunwala, partner at Nangia Andersen LLP, a tax advisory firm. The TCS is available as a credit at the time of filing the tax return. The idea of TCS is to identify cases where remittance patterns of individuals are not commensurate to the income reported in tax returns, said Jhunjhunwala. Banks may start collecting tax at source even on international credit card transactions done in foreign currency, said Vikram Doshi, partner tax, PwC India.
E-invoicing has been made applicable from 1 October to businesses with at least ₹500 crore sales. Businesses have to submit sales invoices in a portal designated by GSTN, the company that processes tax returns. This is expected to automate a lot of data-entry work, as well as reduce errors and mismatches. This is also expected to improve tax officials’ trust in the compliance of companies and reduce chances of audits or surveys. The provision is applicable on business-to-business transactions, said Pratik Jain, leader indirect tax, PwC India.
Import duty on TV part
A key component used in making television sets—open cell panels—will attract 5% import duty, with the government turning down requests for extending the duty exemption any further. The relief was given for one year.
TCS on sale of goods
Sellers having ₹10 crore revenue in the previous year need to collect income tax at source at the rate of 0.1% on receipt of sale consideration above ₹50 lakh. The tax is applicable to the amount above ₹50 lakh.
TDS on e-commerce
From Wednesday, e-commerce platforms such as Amazon are required to deduct income-tax at source (TDS) at the rate of 1% of the gross amount paid to the sellers who use the platform for sales. The idea is to bring small e-commerce participants into the tax net. The deduction is to be made at the time of payment to the e-commerce participant. “Predicament in relation to treatment of subsequent sales returns, discount codes and gift vouchers requires the immediate attention," said Jhunjhunwala.