'To Be Wealthy In This Country Is A Sin': Financial Planner On X Raises Concerns Over Rising TCS Rates On Luxury Goods & Foreign Remittances

In a recent post shares on the social media platform X, formerly Twitter, D.Muthukrishnan, identified by his bio as Certified Financial Planner (CFP) voiced his concerns regarding the increasing Tax Collected at Source (TCS) rates.

His post reads, "Business Standard reports that 1% TCS (Tax collected at source or can also be called Tax collected by Sitharaman) need to be paid for any luxury goods purchased above Rs.10 lakhs. The problem is this would not stop at 1%. TCS for overseas travel and foreign remittances started at 1% or 2% and is now at 20%. To be wealthy in this country is a sin."

The post highlights about the rising tax burden on high-value transaction and has also garnered significant attention from the netizens responding to it.

One of the X user responding to the post, wrote, "To be wealthy and straightforward is definitely a sin in this country. It only deserves thieves and defaulters."

Another user added, "It will bring back cash components. No business will ever refuse someone paying cash, else they lose business. And that’s how the cycle of black money starts in luxury segment."

"Oh, another gem from the Ministry of Woes! So now buying luxury goods is a sin? Next thing you know, they'll tax our very thoughts! At least the wealthy can now proudly wear their "I Paid More Taxes Than You" badge," commended another X user.

After the Union Budget 2024 presentation by the Finance Minister Nirmala Sitharaman on July 23, TCS has been in the limelight especially with the changes related to luxury goods, foreign remittances, and international transactions.

Here is the breakdown of what it means:

In simple terms, TCS i.e Tax Collected at Source refers to a system where tax is collected by the seller at the point of sale on certain items and services.

For example, if an individual purchases a luxury car or a make a significant foreign remittances, TCS is applicable.

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With the recent Budget introduction, there is a significant changes to the TCS rules. The recent changes are as follows"

1. Luxury Goods: As per the new rates, a 1 per cent TCS applies to luxury goods purchased above Rs 10 lakhs.

For example, the debate surrounds here is that now buying a luxury watch for Rs 12 lakhs means you’ll pay an additional Rs 12,000 as 1 per cent TCS.

2. Foreign Remittances and Travel: As per the latest developments, TCS for overseas tour packages is 5 per cent up to Rs 7 lakhs and 20 percent beyond this limit. Payments made with international credit cards are now outside the Liberalised Remittance Scheme (LRS).

However, as per the old rule, TCS on foreign remittances and international credit card payments was set at 20 per cent for amounts exceeding Rs 7 lakhs from October 1, 2023.

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In the case of foreign remittances and travel, for instance, vacation packages for America costs around Rs 8 lakh, then you will incur a 5 per cent TCS on the first 7 lakhs and 20 per cent on the remaining 1 lakh.

3. Educational Expenses: For this, the TCS is 0.5 per cent if the remittance for the education is through a loan and 5 per cent without a loan for the amount exceeding Rs 7 lakhs.

4. Medical Expenses: TCS of 5 per cent is applied for remittances exceeding Rs 7 lakhs.

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Now as per the recent Budget 2024 announcement, an individual can now notify his/her employer about the TCS paid to adjust the Tax Deducted at Source (TDS) on the salary which could lead to lower TDS deductions and can also facilitate refunds for any overpaid tax.