Kaam Ki Baat Archives -

Travelling Abroad? Be Ready to Pay More From July 1, 2023

Sun, 25 Jun 2023 14:19:11 +0000

With a Raised 20% TCS Burden

The Buyt Desk

As per the new announcement in Budget 2023, the Tax Collected at Source (TCS) on foreign remittances, including bookings for tour packages, will rise 4 times from 5% to 20%. From July 1, 2023 you will have to keep additional money ready for the new “20% TCS” rule. An air ticket costing you Rs 50,000 will increase by additional Rs 10,000 with 20% TCS.

What is 20% TCS ?

TCS or Tax Collected at Source is basically a tax that sellers collect for their selected products and services from the customer. In terms of Foreign Remittance Transactions, it is the tax gathered from an individual making foreign transactions. Here, foreign transactions include sending money to a person, shopping and purchasing any asset, making an international trip, and more.

It is one of the new changes to the world of taxes for foreign transactions. The central government has notified changes of rules under the FEMA (Foreign Exchange Management Act), making 20% TCS a recent amendment. Indian citizens can transfer up to $250,000 in a financial year abroad, without the need for central bank approval.

Before the Union Budget 2023, the investment under the LRS beyond INR 7 lakh transaction value came under 5% TCS, applicable up to June 30, 2023. According to a recent amendment, all such foreingn currency transaction will come under 20% TCS from July 1, 2023. The Ministry of Finance clarified that foreign spending up to INR 7 lakh made through international credit or debit card will be exempted from TCS after June 30, 2023. But if the payment is done via online banking the entire payment with no minimum threshold will attract the increased TCS. The expenditure on education and medical treatment is exempted from higher TCS.

Can 20% TCS Be Claimed Back?

Yes individuals can file their income tax return and if TCS deduction is in excess of the tax liability then this amount will be refunded. But be prepared for a larger outgo when you spend in dollars, possibly blocking funds for many months until they get their return or claim the refund, and the gathered tax is adjusted. Taxpayers must track the TCS entries in Form 26AS.

Why is government levying this tax?

TCS is an advance collection of tax on expenses incurred by an individual. The rationale behind this move is to track whether the person making high value foreign remittance reflected proportionatelyin their income tax return or not.

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How ELSS Helps You in Cutting Tax Liability?

Mon, 12 Jun 2023 18:04:26 +0000

The Buyt Desk

If you to invest money in a manner that will help you save tax then equity linked saving scheme could be a smart choice. Under section 80C of the Income Tax Act, 1961 a maximum investment of 1.5lakh can be claimed as a tax deduction. Equity Linked Saving Scheme (ELSS) investment can give you the benefit of a Section 80C deduction. It comes with multiple benefits apart from providing you with a safe option for wealth accumulation and tax deduction.

What is Equity Linked Saving Scheme?

It is the only mutual fund eligible for tax deduction under section 80C provision of the Income Tax Act 1961. In this mutual fund, 65% allocation goes into equity and equity-linked securities like listed shares. It may have some exposure to fixed-income securities as well. The best part of this fund is that it comes with the shortest lock-in period of 3 years as compared to the other investment avenues in section 80C. It allows you to invest as much as you wish, but the tax benefit will be on 1.5 lakh. The scheme has been broadly classified into two types.

Growth Funds – This is a long-term wealth creation platform, and the investor receives the full value at the time of redemption.

Dividend Funds – This has been again divided into Dividend Payout and Dividend Reinvestment. In the first option, Dividend Payout, you get a tax-free dividend. On the other hand, in Dividend Reinvestment, the dividend received is reinvested as a fresh investment.

What are the Upsides of Investing in ELSS Over Other Options in 80C?

The fund offers tax deductions of up to Rs. 1,50,000 a year under the section 80C provision.
It has the shortest lock-in period. The lock-in period of all options in 80C is as follows

Investment	Lock-in Period
Equity Linked Saving Scheme (ELSS)	3 years
National Savings Certificate	5 years
Public Provident Fund	15 years
Employee PF and VPF	More Than 15 years

The return that you earn in ELSS is better than the other investment options

Investment	Estimated Return
Equity Linked Saving Scheme (ELSS)	15-18%
National Savings Certificate	7-8%
New Pension Scheme	8-10%
Public Provident Fund	7-8%
5 Year Bank Fixed Deposit	6-8%

There is no upper capping in ELSS investment. On the other hand, minimum capping depends on the mutual fund house.
It is the only tax-saving investment that offers inflation-beating interest. Also, it is the highest among all other options in section 80C.
It gives twin benefits. You can create wealth while saving tax.

How to Start Investing in ELSS?

Investing in ELSS is easy. You can do it online too. To start, you need to open an account with the fund house of your choice and complete the KYC process there. After the verification, you can invest the following way.

Choose the platform through which you will invest.
In the category, select the option “Tax Saving”.
Select the fund you want to invest in.
Tap on “Invest Now”. Follow the remaining process to start.

The features mentioned make ELSS a better option to save tax and accumulate capital. However, keeping all precautions while selecting the fund house will protect you from risks. A direction from an expert is good if you are doing it for the first time.

Also, ELSS redemption is not tax-free. The long-term capital gain of Rs 1,00,000/year is tax-free. Gain above the limit, attract tax of 10% in addition to applicable surcharge and cess.

The dividend you receive from your investment is added to the overall income and taxed according to the tax slab you fall. Despite all the conditions, it is the best tax-saving option under section 80C of the income tax act.

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Income Tax Rules for Senior and Super Senior Citizen

Mon, 22 May 2023 16:24:38 +0000

The Buyt Desk

The income tax framework in India relies on the progressive taxation system. According to this system, people with higher income levels pay a significant percentage of their income in the form of taxes. Several provisions have been made for specific exemptions to senior and super senior citizens retired from their active professional lives.

A senior citizen is an Indian resident whose age is above 60 years and below 80 years. For people who are above 80 years or more they are considered as super senior citizens. Senior citizens get a special tax slab and enjoy more tax deductions for interest gained from bank and post office, deductions under medical insurance premiums, and more.

Basic exemption limit

The income tax benefits are quite akin for senior citizens and super senior citizens for the financial year 2023-2024, however, there are some differences in the higher basic exemption limit. The exemption limit is Rs. 3 lakh for senior citizens. So, they’ll not have to pay any tax if their income is Rs. 3 lakh or less.

The basic exemption limit is Rs. 5 lakh for super senior citizens, which is higher than that provided to senior citizens. This higher exemption limit is to ensure that super senior citizens have a higher disposable earning for their medical and other needs. The exemption limit is Rs. 3 lakh for senior citizens and super senior citizen taxpayers under the New Tax Regime.

Income Tax Slab for Super Senior Citizens Under Old Tax Regime

Super senior citizens can enjoy the benefit of old as well as new tax regimes because they have the right to choose between the two. According to the old tax regime, the tax slab rates for super senior citizens include –

Income up to Rs. 5,00,000 no income tax
Income Between Rs. 5,00,001 to 10,00,000 20% income tax
Income More than Rs. 10,00,000 30% above Rs. 10 lakhs.

Income Tax Slab for Senior Citizens Under Old Tax Regime

Senior citizens have the option to pay the tax according to the old or new tax regime. Non-resident senior citizens are not eligible for the tax slabs highlighted below. The reason is that the normal provisions of income tax apply to them.

The income tax slab for senior citizens is highlighted below –

Up to Rs. 3,00,000 slab without any tax.
Rs. 3,00,001 to Rs. 5,00,000 with a 5% tax rate.
Rs. 5,00,001 to Rs. 10,00,000 income slab; Rs. 10,000 and 20% of income more than Rs. 5,00,000.
More than Rs. 10,00,000 income slab; Rs. 1,10,000 and 30% of income more than Rs. 10,00,000.

The above-mentioned tax for senior citizens and super senior citizens can be increased by Health and Education Cess at the 4% rate of the income tax. Moreover, the surcharge is applied based on the total earning as given below –

10% surcharge rate for total income greater than Rs. 50 lakhs.
15% surcharge rate for total income greater than Rs. 1 crore.
25% surcharge rate for total income greater than Rs. 2 crores.
37% surcharge rate for total income greater than Rs. 5 crores.

Under the new tax regime, the surcharge rates have been decreased to 25 percent for taxpayers having more than Rs. 5 crore income.

Income Tax Slab Rate Under New Tax Regime

Finance Act, 2020 announced a new tax regime for senior and super senior citizens. According to this new regime, they need to pay a concessional tax. They have to let go of many available deductions and exemptions.

According to the new tax regime, the income tax slab rates are –

Up to Rs. 2,50,000; no income tax rate.
Rs. 2,50,001 to 5,00,000; 5% income tax rate.
Rs. 5,00,001 to 7,50,000; 10% income tax rate.
Rs. 7,50,001 to 10,00,000; 15% income tax rate.
Rs. 10,00,001 to 12,50,000; 20% income tax rate.
Rs. 12,50,001 to 15,00,000; 25% income tax rate.
More than Rs. 15,00,000; 30% income tax rate.

Senior citizens and super senior citizens are eligible for a tax rebate of Rs. 12,500 if their earning is less than Rs 5 Lakhs. It is applicable for both the tax regime.

Tax Rebate and Deductions for Senior Citizens Will let go if they pick the new tax regime are as follows-

In the old tax regime, under the section 80TTB of Income Tax Act, senior and super senior citizens are eligible for a deduction of Rs. 50,000 on income earned from interest of savings banks as well as on their fixed deposits.

Under Section 80D, health insurance premiums of Rs 50,000 can be claimed as deduction by senior and super senior citizens.

Senior and super senior citizens can claim a deduction of Rs 1 Lakh in respect of medical expenses incurred for specified diseases of self or dependent senior citizens as per the Section 80DDB of Income Tax Act.

They can claim a flat deduction of Rs. 1,00,000 in respect of medical expenses incurred for specified diseases of self or dependent senior citizen relatives as specified in the Act under Section 80DDB.

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Do You Have An Inactive EPF Account- Should You withdraw or Continue the Account?

Mon, 15 May 2023 14:10:28 +0000

The Buyt Desk

You changed your job or have stopped working but neither withdrew the EPF money nor transferred it to your place of employment. If so then there is is a possibility that the EPF account will be considered to be an an inactive account. Do you know that the government can forfeit your old inoperative or inactive EPF account?Many people have this misconception that keeping their EPF amount for a longer time will result in higher interest rates . But this is not the case always.

What are inoperative or inactive EPF accounts?

EPF accounts are considered inoperative or inactive if they are dormant due to any of the following reasons –

You have not withdrawn the amount within three years after you stopped working or left the company.
A EPF account holder died but the claim has not been settled or filed after 36 months of his or her death.
Amount remitted to a member has not been claimed back or has been undelivered.
Any amount due to an employee from an employer which remains unsettled after the claim.
No contribution has been made by the employer to the account for 3 years.

In the present day, EPF provides an 8.5% rate of interest without any tax. This is one of the best debt products that provide high returns with complete safety. According to the existing rules, if there are no contribution made in the EPFO account for 3 years, it will be considered an inoperative or inactive account.

Your account will also become an inoperative account if you requested a withdrawal but fail to claim the amount due to incorrect bank details, wrong address, or other reasons and your deposit is lying with EPFO for 3 years from the date it became payable.

Later EPFO clarified that interest will be payable on a non-contributory duration up to 58 years of age of a member. In 2016, the government launched SCWF (senior citizen welfare fund) regulations. According to SCWF regulations, the amount remaining in the inoperative EPF accounts will be moved to SCWF.

Withdraw or continue – which is the right option?

Whether you should withdraw or continue with your old inactive EPF account is based on the changes in ITAT, EPFO, and SCWF. Here, you’ll get the answer to this question.

Your EPF account will convert into inactive only when you are 58 years old and do not withdraw the balance from your EPF account (earlier it was three years from non-contributory duration).
EPFO will transfer your EPFO account to SCWF when you keep your non-contributory EPF account for over 10 years.
You will earn the eligibility to gain the interest from the date of non-contributory EPF (a day when you stop working and contributing to your EPF account) to the withdrawal time. Remember that such interest is taxable.
SCWF will keep your EPF account for 25 years. You will get the interest rate announced by the government on that specific SCWF.
You and your nominee are eligible to claim the EPF fund from SCWF through EPFO during the time of 25 years.
Once 25 years with SCWF gets completed and you still keep your account active without withdrawing any amount, the government will forfeit the amount. In case you want to withdraw the EPF account after 25 years, you would have to go to court to get the amount back forfeited by the government.

Note that your EPF account will not move to SCWF automatically. EPFO will notify you regarding this by reaching you through contact details linked to your EPF account. They will transfer it to SCWF if they don’t get any response from you and you don’t make any withdrawal.

heT bottom line is that it is good to move your old EPF account to the current operative EPF account immediately. Alternatively, you can withdraw your EPF balance after two months from unemployment or a non-contributory period.

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Should You Take a Holiday Loan for Going A Vacation?

Thu, 11 May 2023 15:22:36 +0000

The Buyt Desk

Planning to go on a holiday but your pocket doesn’t allow. A holiday loan may come to your rescue but you must know how it works? First thing first it is a type of unsecured personal loan. This type of personal loan is meant for seasonal expenses. Just like other personal loans, you can quickly get a holiday loan without providing collateral. You can get this loan from online lenders, credit unions, and banks with fixed monthly payments and fixed interest rates. Based on the lender, you can borrow anything between Rs 15,000 to whatever amount you wish to.

How does a holiday loan work?

Like most personal loans, holiday loans don’t need collateral if you meet the qualifications of your lender. The loan amount, interest rate, and monthly payment are affected by your income and credit rating. Some lenders enable borrowers to pre-qualify for a loan without affecting their credit score by giving some financial details.

For what purposes you can use a holiday loan

Holiday loans can cover the bigger cost of travel. For example, paying for a place to stay, meals, and airplane tickets. You can save a lot on holiday travel using your holiday loan.
You can use your holiday loan to buy a gift for everyone on your list when you don’t have the required money set aside. It can ease the stress that present-giving can make on your finances.
Another use you can make of a holiday loan is to get financial assistance with entertaining expenses like groceries, catering, and decoration.
Some lenders allow borrowers to use the money from a holiday loan for other expenses. They don’t put any limitations on the way you use the loan amount.

Holiday Loan is an ‘Easy to get Loan’

If you have a goo track record of paying back your loans on time then you may consider a holiday loan as its very easy to get –

It doesn’t require much documentation.
You can get your holiday loan approved and disbursed within some days based on the T&Cs (terms and conditions) of the NBFC and bank. You can even get the money within some minutes if you have got a pre-approved personal loan offer from a recognized financial institution.
Since a holiday loan comes with no-end usage restrictions, you can use the amount to pay for all travel-related expenses.
You don’t need to provide any collateral, guarantor, or security to borrow the amount as it comes under the category of an unsecured loan.
You can apply for the loan procedure online right from your home.
Timely paying the amount each month helps in creating a good credit score.
Since the loan has a fixed interest rate, you can plan your monthly repayment with a clear format of precise dues.
You can get convenient repayment plans throughout your loan tenure to enjoy your dream vacation.

Should you get a holiday loan?

Since there are no limitations on the end-use of the loan money, you can use it for travel-related and non-travel-related expenses. But, remember this is an unsecured loans that come with high-interest rates. Taking a holiday loan might be a good option to plan and enjoy your dream holiday without worrying about delaying your vacation or suppressing your holiday wishes due to a lack of savings. However, it is always recommended not to go on a vacation with the borrowed amount if you can’t afford to repay the money.

Based on the NBFC policy or the bank, the holiday loan has an interest rate between 12-28% per annum. Let us assume that you’re borrowing a holiday loan of Rs 5 lakhs at a 15% per annum interest rate, you would have to pay Rs 17,333 for 3 years for about 5-6 days of holiday. Alongside the expenses covered in your holiday loan, you would come across some unwanted spending.

To cover those expenses, most vacationers use their credit cards. When the credit card bill becomes high, some people change it into credit card EMIs. The stress of a high-interest loan cost and the huge credit card EMIs create a huge financial burden. To reduce the financial pressure, sometimes a person has to use their savings. In the future, when you need to borrow money for any emergency, it can be difficult to get a new loan because your holiday loan will rise the debt-to-income ratio.

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How to Repay Your Education Loan?

Sun, 23 Apr 2023 11:43:45 +0000

The Buyt Desk

An education loan is a specific-purpose loan given to complete higher education. It can run for as long as 15 years but the loan can be paid off early to reduce interest payments. Education loans have a unique ‘Moratorium period’ feature that allows borrowers to select not to pay the EMI for up to 1 year from the study completion or 6 months from beginning a job. But, this period varies based on the bank policies.

When you should start repaying an education loan?

Start repaying a loan as early as possible. The Sooner you finish the loan better it is so you can use that money to reach other financial goals. Also, the moratorium period has some interest. The interest rate of an education loan is too high. Hence, if you don’t repay the principal amount, the interest will keep accumulating. This results in an increasing burden of interest and rising overall loan costs without reducing the due loan amount. On the other hand, starting education loan repayment early can help you in earning a good credit score.

Best tips to repay the education loan

Here is how to repay an education loan with limited income.

Go with a higher loan tenure

Choosing a secured education loan helps in getting a tenure of 10 or more years. The longer tenure provides a more comfortable loan repayment margin by reducing the monthly EMI installment. Start repaying the loan in the moratorium period. To reduce the overall interest rate and repayment cost, try to allot some resources towards interest prepayment, primarily during the moratorium period.

Start part-time job

Start planning your loan repayment while studying. Take out some time from your study schedule and start working part-time or as a side hustle. For example, providing graphic design services, teaching some courses, online selling your art, and others. This helps in improving your income and start paying a loan when you’re pursuing your studies.

Look for a balance transfer

Consider the bank loan transfer to avail of low-interest rates. Try to negotiate with your current bank for a cheaper interest rate as much as possible. If they don’t agree to that, use the amazing facility of a balance transfer.

Selecting a lender that provides a low-interest rate on your loan balance amount helps in saving a significant portion of the interest amount. Having the same EMI will help you in saving further on interest payments. This will reduce the tenure to some extent and prevent interest obligations.

Live economically

Lifestyle inflation in tandem with your earning can make whole efforts of increasing your income in vain. So, try to live economically with only the basic necessities till you repay the education loan amount. Create a defined budget with all necessary expenses like clothing, food, rent, and others. Get rid of all the unwanted expenses. Find out the difference between your desires and requirements and give priority to the latter.

Get a loan only for the beneficial course

Avoid taking a loan for a costly course that promises to be an airstrip for a worthwhile salary package in the future. Evaluate your interest first. If your interest is in a course that is expensive, go for it while considering its present and future scope. Determine the rules and regulations for working in the nation, immigration regulations, visas you can apply for, and other important factors. This will help you in repaying the loan while being completely satisfied and happy with your job profession.

More saving

Save some amount from your monthly salary and use it in the future for your education loan prepayment. For more savings, you can start fixed deposits (FDs), open a savings account, or a recurring deposit (RD). Financial experts always recommend saving as much as possible and limiting spending for a time till the loan tenure. It will help in timely and easy paying the loan.

Use tax benefits

Students taking an education loan from Indian banks can make the best use of tax benefits under Section 80E. Under this section, borrowers who have taken up and repaid the education loan are eligible to get a tax deduction on the interest paid on that loan.

Process of repaying the education loan

Education loan repayment is not a highly challenging process. You only have to contact your bank manager who will note down your account details and start the loan repayment process on the mode of auto deduction. For more associated information, you can look for different education loan schemes launched in India.

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RBI Guidelines on Loan Recovery

Wed, 12 Apr 2023 18:48:05 +0000

The Buyt Desk

After instances of gruesome tactics of recovery agents the Reserve Bank of India has tightened the rules of loan recovery. Banks have been directed to ensure that borrowers are not harassed in the name of loan recovery. As a part of the Fair Practices Code RBI told that REs (regulated entities) shall strictly make sure that loan recovery agents don’t resort to harassment or intimidation, either physically or verbally, against any customer while recovering their debt.

RBI Guidelines for Loan Recovery

Banks, cooperative banks, asset reconstruction companies, non-banking financial companies, and housing finance companies must ensure that agents do not resort to unfair means. Public humiliation of borrowers, sending invalid messages via social media or on mobile, and contacting family members or friends will be considered intimidation. The recovery agents would not be allowed to call borrowers at odd hours i.e. before 8 am and after 7 pm for making false representations and loan recovery.

Regulated entities also need to make sure that loan servicing and repayments must be performed straight in their respective bank accounts without using pool accounts or third-party pass-through. Also, the disbursements must be executed in the bank account of the borrower.

The recovery agents can’t charge any fee to the borrower and no payment should be made by the borrower to the recovery agents. According to RBI, any charge due to lending service providers must be paid straight by the regulated entity rather than a borrower. They will also need to provide a cool-off time during which the borrowers can come out from the digital loans by paying the proportionate cost and principal amount without any sort of penalty.

Regulated entities further have to make sure that all loan service-providing companies engaged by them have a nodal grievance redressal officer to handle the concerns associated with digital lending.

RBI New Guidelines for Loan Recovery Agents

RBI has issued new guidelines for loan recovery agents. They are now legally bound by a few guidelines as listed below –

Borrowers must be informed initially regarding recovery agency details.
While engaging with agents, banks must follow a diligence procedure. They would be responsible for all concerns filed against their agents.
The loan recovery agent must have a copy of the notice of the bank and authorization letter when interacting with the defaulter.
If a concern has been lodged by a customer, banks are prohibited to forward that case to a recovery agency until that problem has been resolved.
This is invalidated in case the bank is agreed with the evidence that complaints or concerns are pointless.
It is the bank’s responsibility to make sure that the complaints of borrowers about the loan recovery procedure are properly addressed.

At the bottom line, as per the RBI regulations, all the debt collection processes of banks must be designed around the borrowers’ dignity and respect. Agents have to make all attempts to solve problems in an amicable and peaceful manner avoiding calling at a specific time or place borrower would not be honored. The bank and its representatives must give a priority to the privacy of its customers.

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How to Smartly Use Reward Points on your Credit Card?

Tue, 14 Mar 2023 16:47:39 +0000

The Buyt Desk

Credit card is not a bad thing when used smartly. In fact, this small piece of plastic can help you save a lot of money and earn, too. Want to know how?

A US physicist Konstantin Anikeev managed to earn Rs. 2.17 Crores from his credit card. It may sound unbelievable but it is true.

Every credit card accompanies certain benefits. Reward point is one of them. Every time you make a transaction with your card, you get reward points in return. Credit card companies also provide reward points for the timely payment of credit card bills. Anikeev accumulated these points and became rich. After this incident came to the central bank’s notice, they altered this provision to avert the misuse of reward points or cashback. However, you can still save money by smartly using the credit card’s reward points.

What is Credit Card Reward Point?

Credit card reward is the points you earn on the expenditure of every Rs 100. Remember, the ratio of reward points on every spending may vary according to cards.

In addition to that, the reward points also vary according to the place you have used the credit card. E.g., using a credit card at a particular restaurant or site earns you a better reward point.

As you spend, the reward points accumulate in your account, and once it is enough, you can best use them in your next spending.

Pay Your Bill – Every reward point carries some value, and it varies across the cards. It can range from 25 paise for one reward point to Rs 1 for one reward point.

Since the reward points are cash, you can use them to pay off your card bill if you wish to do so. However, not all banks allow paying an outstanding bill via reward points. Do check it before acting on it.

Use Them to Buy Things You Need – You can use the reward points you earned on the credit card to buy things. If your bank does not allow you to pay the bill via reward points, you can use them to buy stuff. It might surprise you that every bank offering credit card has a shopping portal. And they allow credit card holders to use the reward points to shop. It includes a wide range of products.

Some of the best bank stores are ICICI payback, HDFC MyRewardz, etc.

Buy Vouchers – On the e-website of your bank, you can find some exciting deals and vouchers which you can use to shop for products from your favorite brand, and if not, you can save some bucks.

Book Flight/Hotel – Some bank allows credit card users to book flight or hotel tickets with reward points. Even if the reward points do not help you buy the whole flight ticket, they will help you get a decent discount on the ticket price.

Gift Card – You can use reward points to buy gift cards which you can further use to shop for things.

Cashback – Another simple way to redeem reward points is cashback. Just ask your bank to give you cashback in place of reward points. After this adjustment, you will get cashback instead of reward points for every transaction.

Other Options – Other than the discussed option, banks provide discounts on fuel charges, entertainment purchases, training classes, etc., under their reward points redemption program. Although, this option varies across cards.

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Soon You Will Complete KYC Procedure Through Digilocker

Sat, 04 Mar 2023 05:27:14 +0000

The Buyt Desk

In a big push toward digitization- Aadhaar and Digilocker will be used as a one-stop solution to complete KYC (Know Your Customer) procedure. This attempt is believed to assist people in easily sharing and updating the important information maintained by several bodies like regulated entities, regulators, and government agencies. Digilocker will serve as the go-to platform for updating identity and addresses. Aadhaar will be the foundational identity.

What is Digilocker?

It is an initiative from the MeitY – Ministry of Electronics & Information Technology, under India’s Digital Programme. It is basically a digital document wallet that is designed to support mark sheets, and government identity documents, among others. This is a widely used platform for documents and certificates digital verification. It has reduced the need to carry several physical documents. It has helped in launching a shift towards paperless governance.

This digital document is categorized into State Government, Central Government, Health, Transport, Banking & Insurance, Ministry of Defence, and many more.

PAN Number (Permanent Account Number) will be used as a basic identification for all the digital systems of certain government agencies, under the National Data Governance Policy.It will help in giving access to anonymized data.

Use of Digilocker

To use Digilocker, you must have a scanned copy of the document or certificate like a DL (Driving License), PAN card, or an Aadhaar Card. Then, you will have to upload it to the Digilocker app with the e-signature of the users. E-signature is just like self-attesting documents. E-sign is one of the simplest methods of digitally signing electronic documents.

To digitally sign documents through Digilocker, follow the below e-signing method.

Login to your Digilocker account
Access the ‘Uploaded Documents’ icon
You will see a list of uploaded documents
Tap on the eSign link available at the front of the document required to sign digitally
Now, you will receive an OTP on your specific mobile number
Enter that OTP in the text box and click on the eSign button
Selected documents shall be eSigned i.e. signed digitally
You can eSign a specific document at one time. When you digitally signed the chosen document, it will convert into PDF if it is not in PDF format.

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TCS on Foreign Remittance Increased to 20%- Who will it Impact?

Thu, 02 Mar 2023 18:59:30 +0000

The Buyt Desk

Tax Collection at Source i.e TCS rate has been increased from 5% to 20% for foreign remittances under the Liberalised Remittance Scheme (LRS). From now, a higher tax will be imposed on foreign vacations or work tours. Thankfully this change is not applicable to education and medical-related expenses but worldwide tour packages and other remittances will become expensive.

TCS on remittances was first announced in 2020 under the LRS. It was introduced to monitor the remittances made and to associate these with the income tax returns of individuals who made the remittances. Currently, different TCS rates are applied based on the transaction nature.

Earlier, there was a yearly limit of Rs 7 lakh on remittances which no longer exists today. TCS can’t be considered a tax by itself. The credit for the TCS amount paid on any transaction is given to an individual who has paid the TCS amount for adjustment against their tax liability for the year.

The gamut of LRS will see a wide spectrum of payment such as expenditure via any mode of payment including credit cards, debit cards, and travel cards. The TCS will be adjusted against the income tax when filing the ITR (Income Tax Return). These modifications will be applied from July 1 once the bill is passed by the Parliament.

How it will work?

Let us assume that an individual has a total remittance of Rs 10,000. Rs 2,000 TCS will be applied to the amount. If they have Rs 3,000 tax on their income, they will have to pay just Rs 1,000 as the remaining amount will be adjusted. However, if their income tax is Rs 1,000, they will get a refund of Rs 1,000 as some part of the income tax return.

Why This Increase?

The rationale behind this is that government wants to extract tax from HNIs (high-net individuals). They are using the LRS scheme for transferring the huge amount to foreign, but their income tax payments and compliances have not been appropriate.

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