NEW DELHI: The Centre has raised the tax collection at source (TCS) on sale of overseas tour packages to 20 per cent from 5 per cent earlier without any threshold. Also, tax collection at source has been increased to 20 per cent on foreign remittances (except for the education and healthcare needs) where the aggregate amount exceeds Rs 7 lakh or above.
“Tour packages are generally taken by people, whose effective tax rate is certainly more than 30 per cent, so if we are charging them at 30 per cent, then certainly it is not high. Our attempt has always been to charge TDS at similar rates if not exactly the same rates,” Sanjay Malhotra, Revenue Secretary, said.
On the question of the need to lower the highest surcharge on the super rich to 25 per cent from 37 per cent, he said, “We had the highest tax rate on individuals compared with many advanced countries. It was introduced as an interim and now it has been reduced.”
“The move is towards lower rates but fewer avoidance measures and exemptions. If you look at high networth individuals there are a number of tax removal measures in this budget along with the reduction in surcharge,” TV Somanathan, Expediture Secretary said.