On 1st October, 2023. Mr. Aman makes payment of 9,00,000 towards cost of overseas tour programme package to Mr. Robert, a seller of an overseas tour…

CA Final · Direct Tax Laws and International Taxation · PYQS · November 2024
On 1st October, 2023. Mr. Aman makes payment of 9,00,000 towards cost of overseas tour programme package to Mr. Robert, a seller of an overseas tour programme package and an authorized dealer under the Liberalised Remittance Scheme of the RBI. Mr. Aman has not filed his return of income for the last two assessment years i.e., 2023-24 and 2022-23. Mr. Aman has total TCS of 51,000 in A.Y. 2023-24 and - 60,000 in A.Y. 2022-23 to his credit. Tax is collected and deposited before due date of filing return of income for both the assessment years.

Suggested Answer and Working Notes:

(ii) Mr. Robert, being a seller of an overseas tour programme package has to collect tax at source under section 206C(1G) from Mr. Aman on receiving the amount for purchase of package. For the amount received on or after 1.10.2023, tax has to be collected at source @5% on 7 lakhs received, and @20% on 2 lakhs, being above 7lakhs. Since Mr. Aman has not filed his return of income for A.Y. 2023-24 and A.Y. 2022-23 and the TCS credit exceeds - 50,000 for both A.Y 2023-24 and A.Y. 2022-23, section 206CCA is invoked which provides, tax is required to be collected at source, in his case, at the higher of twice the rate specified under section 206C(1G) and 5%. However, the higher rate of TCS leviable cannot exceed 20%. Accordingly, Mr. Robert is required to collect tax @10% (twice of 5%) on 7 lakhs and @20% (40% twice of 20% but restricted to 20%) on 2 lakhs (9lakhs – 7lakhs).

Topics: Deduction, Collection and Recovery of Tax

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