In respect of the following independent case scenarios, you are required to discuss the provisions related to tax deducted at source/tax collection…

CA Final · Direct Tax Laws and International Taxation · RTP · September 2025
In respect of the following independent case scenarios, you are required to discuss the provisions related to tax deducted at source/tax collection at source for the year ended 31st March, 2025: (2) Mr. Rajat took a loan of 12 lakhs from his employer, Josh Private Limited, an Indian domestic manufacturing company for sponsoring studies of his daughter in Australia. Out of the said loan, he remitted - 9,75,000 towards fees to the University in Australia for his daughter's education on 01.10.2024. The remittances were made through the same authorized dealer under the Liberalized Remittance Scheme of RBI.

Suggested Answer and Working Notes:

Tax would be collectible at source under section 206C(1G) by the authorised dealer, who received an amount, under the Liberalised Remittance Scheme of the RBI, for overseas remittance from Mr. Rajat at the rate of 5% of the sum exceeding 7lakhs. Tax of 13,750 (5% of 2,75,000, being the sum exceeding 7lakhs) would be collectible by the authorised dealer on 1.10.2024 on remittance of 9,75,000 for education of Mr. Rajat's daughter out of the loan from his employer. The concessional rate of TCS of 0.5% would not be applicable, since the amount of remittance is not out of a loan obtained from any financial institution as referred under section 80E.

Topics: Deduction, Collection and Recovery of Tax

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