New Delhi, Feb 13 () : Tax Collected at Source (TCS) net will be widened to plug leakage of revenue in the coming budget 2013-2014. The sectors that are likely to come in are the real estate, mutual funds, credit card payments for luxury purchases will be subjected to TCS. Tourism sector which conducts foreign tours will also be subjected to TCS.
The finance ministry is bringing in a mechanism by which transactions would be reported when tax is paid and in the sectors where black money is more in flow. The aim is also to encourage for e-payment instead of hard cash.
Income Tax did an assessment of payments received from TDS and found that 1.2 million people who had income did not file tax returns.
Tax Collected at Source (TCS) is done by a seller at the time of selling and the money is deposited in the State or Central treasury and the buyer is given a receipt whereas for payments made by employer tax has to be deducted and deposited in the tax department and this is known as Tax Deducted at Source (TDS). The employee is given a TDS certificate which will be filed in the annual returns.
In Budget 2012-13, new categories for payment of TCS and TDS were added. The move is to levy TCS on certain high value transactions and the idea is to keep track of the money chain. Till last year TCS was levied on personal consumption use. It was modified for gold and jewellery by which anyone who bought gold for business or personal use had to pay TCS.
Iron ore, lignite and coal were brought under TCS since these sector transactions were not controlled and many went unreported. Here however TCS need not be paid for personal use. Already transfer of immovable property and payments to company directors are under TDS.
TDS on immovable property was modified with only certain categories being in the list. Central Board of Direct Taxes swamped with legal disputes over TCS and TDS had to exempt certain transactions by an order in January this year.