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Union Budget 2023 made unfavourable changes in taxation on several investment and insurance avenues. A unkind cut has come in the form of a new tax collection at source (TCS) proposal.
Your overseas tour packages will now be subject to TCS and so will any international stocks you invest in.
TCS without threshold
If you book a tour package for ₹1 lakh with an operator, there will be a 20 per cent tax collected at source. Therefore, you will either have to settle for a ₹80,000 tour option or pay ₹1.25 lakh to get the same ₹1 lakh value package, given the TCS norms.
The existing norm is 5 per cent without any threshold limits.
There is more disturbing news for those investing in the US or European stocks. They will also face a new TCS regime at 20 per cent. Again, for buying ₹1 lakh worth of stocks, you need to pay ₹1.25 lakh.
Currently, only 5 per cent of the amount in excess of ₹7 lakh was subject to TCS.
Of course, these are considered as taxes paid. You can set reduce your tax liability to the extent of the amount you pay as TCS.
But it requires you to have greater cashflows at the outset. These rules apply from July 1, 2023.
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