Budget 2024: This Change In TCS Filing Could Increase Your In-Hand Salary

If you make payments or remittances abroad, then there is an amendment in the 2024 Budget that will simplify the refunding of tax collected at source.

For context, under the Liberalised Remittance Scheme (LRS), all residents are allowed to freely remit up to $250,000 every year. Then, there is a tax that is collected when any payment is made through LSR, known as TCS.

There was no mechanism to offset the tax collected at source against the tax deducted at source. Essentially, taxpayers had to claim for the TCS as a separate refund.

This is mostly because employers file taxes for most salaried individuals and the employer also deducts their taxes.

"The employer did not have the power to adjust the TCS against the TDS," said Samir Kanabar, tax partner at EY India.

The amendment in Budget 2024 allows the employee to declare their TCS to the employer, who can now adjust their tax accordingly.

"Refunds that took a year or so to happen, will happen in real-time as the employer can adjust for it," said Kanabar.

This essentially translates to more in-hand salary of the individual as the claim for their TCS refund need not be done separately.

"This will increase their in-hand salary to an extend, as it will reduce their tax outflow," said Arvind Rao, founder of Arvind Rao & Associates.