FAQs on amendment proposed to rates of Tax Collection at Source u/s 394(1) of the Income-tax Act, 2025
Income Tax Department has issued a FAQ on amendment proposed to rates of Tax Collection at Source under section 394(1) of the Income-tax Act, 2025
Q.1 Are the any changes proposed with regard to rates of TCS in Finance Bill, 2026?
Ans. Yes, changes are proposed in various TCS rates. Following are the proposed changes:
| Sl. No. | Nature of receipt | Current Rate | Proposed Rate |
| 1. | Sale of alcoholic liquor for human consumption | 1% | 2% |
| 2. | Sale of tendu leaves | 5% | 2% |
| 3. | Sale of scrap | 1% | 2% |
| 4. | Sale of minerals, being coal or lignite or iron ore | 1% | 2% |
| 5. | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees |
(a) 5% for purpose of education or medical treatment. (b) 20% for purposes other than of education or medical treatment |
(a) 2% for purpose of education or medical treatment. (b) 20% for purposes other than of education or medical treatment |
| 6. | Sale of “overseas tour programme package” including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure |
(a) 5% of amount or aggregate of amounts up to ten lakh rupees; (b) 20% of amount or aggregate amounts exceeding lakh rupees. |
2% |
Q.2 Why TCS rates are being rationalized?
Ans: The TCS rates are rationalized with a view to provide uniform rate of TCS to the extent possible.
Q.3 Elaborate the changes made in Finance Bill, 2026 with respect to rate of TCS on remittances?
Ans. At present, TCS at 5% is collected if remittance is for the purposes of education or medical treatment and TCS at the rate of 20% is collected for purposes other than education or medical treatment. It is proposed to reduce the rate of TCS to 2% for purposes of education and medical treatment. However, there is no change in TCS rate for purposes other than education or medical treatment.
Q.4 What is purpose of reducing TCS rates for remittance for purposes of education or medical treatment?
Ans. The rationalization of rates has been done to provide more liquidity to the remitter and minimize locking of funds. In such case the rate has been rationalized only keep track of the transaction
Q.5 Whether any change is proposed in the threshold limit for TCS on remittances?
Ans. No. The threshold limit for applicability of TCS on remittances under the Liberalised Remittance Scheme remains same i.e. Rs. 10 lakhs.
Q.6 Explain the changes in rate of TCS on sale of overseas tour programme packages?.
Ans. There are two changes being made ie. (i) Change in rate of TCS; & (ii) removal of threshold. Accordingly –
(i) TCS @5% of aggregate amount up to ten lakh rupees and @20% of aggregate amount ten lakh rupees is presently applicable on sale of overseas tour program package. It is proposed to reduce the rate of TCS to 2%.
(ii) The threshold limit for TCS on overseas tour programme packages has been removed. TCS @2% will be collected irrespective of the amount paid for overseas tour programme package.
Q.7 From when will these changes be made effective?
Ans. These changes will be effective from 1st April, 2026
Assessing Officer had taken a reasonable stand that 25 kg written in WhatsApp chat/text message was 25 lakh - ITAT…
Shareholders are only owners of the shares of the company therefore, income from properties earned by the company cannot be…
When approval for reassessment was granted by unauthorised authority, such jurisdictional error cannot be shielded by the law of limitation…
ITAT on presumption of bogus purchases ought to have remanded case to AO to reconsider the whole matter instead of…
Where proceedings u/s 153C are barred by limitation, AO can not reopen the case invoking section 148 and 148A of…
Corporate guarantees executed by the corporate debtor constitute “financial debt” under IBC and banks to be recognized as financial creditors…