The government will soon clarify that the $300-billion exports sector would not be covered by the proposal for 1% tax collected at source (TCS), introduced by the budget. Officials told ET that the budget has an enabling provision to provide exclusions.
“The intent is not to tax overseas buyers of Indian goods. Since these entities are based abroad, they do not have any tax liability here. The idea is not to bring them under the tax net. There is an enabling clause that allows the goveror to notify entities that would not be covered, and exporters will be excluded,” said a senior government official.
A seller of goods has to deduct TCS at the rate of 0.1% before making payments in excess of Rs 50 lakh. In cases where the buyer doesn’t have a Permanent Account Number (PAN) or Aadhaar — which is the case with exports — the rate will be 1%, says the budget.
Source: Economic Times
