The Union Budget establishes a new financial support system which covers expenses for international travel. The Finance Minister declared that tax rates for educational and medical expenses and international travel costs through the Liberalized Remittance Scheme will experience a reduction which affects Tax Collected at Source (TCS) rates.
Education and Medical Treatment
The current TCS rate of 5% applies to international educational and medical treatment expenses that exceed Rs. 10 lakh. The government has proposed lowering this rate to 2%. The new regulation will decrease financial obligations for families who support students and patients who study and receive medical treatment in foreign countries.
Foreign Travel
The existing TCS for foreign trips charges 5% on tour packages which cost up to Rs. 10 lakh and22% on amounts which exceed Rs. 10 lakh. The new proposal reduces TCS to 2% on all foreign tour packages regardless of their value.
Other Fund Transfers
The current TCS rate of 20% applies to all transfers which do not fund educational or medical purposes.
Rationalization of TCS in Business Transactions
The government has established new TCS rates which apply to specific business sectors.
- The TCS rate for dealers of liquor and scrap and minerals now requires them to pay 2%.
- The TCS on tendu leaves has been reduced from 5% to 2%.
The implementation of these initiatives will simplify TCS compliance requirements while reducing costs for both individuals and businesses.
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