Business

IIE Digital Desk : The Finance Ministry has set a combined threshold of Rs 7 lakh for calculating tax deducted at source (TCS) on payments made to professionals such as lawyers, chartered accountants, architects, and engineers. The new threshold will come into effect from July 1, 2023. Currently, TCS is deducted at 1% on payments made to professionals for professional services exceeding Rs 30,000 in a financial year.

The new threshold will mean that TCS will be deducted only on payments made to professionals exceeding Rs 7 lakh in a financial year. The Finance Ministry has said that the move is aimed at simplifying the TCS regime for professionals and reducing the compliance burden on them. The Finance Ministry's decision to set a combined threshold of Rs 7 lakh for calculating TCS on payments made to professionals is a welcome move. The move will simplify the TCS regime for professionals and reduce the compliance burden on them.

TCS is a tax that is deducted at source from payments made to certain professionals. The tax is then paid to the government by the person making the payment. The current TCS threshold of Rs 30,000 is relatively low. This means that TCS is deducted on a large number of small payments made to professionals. This can be a burden for professionals, as they have to file TCS returns and pay the tax even if the amount of TCS is small.

The new threshold of Rs 7 lakh will mean that TCS will only be deducted on large payments made to professionals. This will reduce the compliance burden on professionals and simplify the TCS regime for them. The Finance Ministry's decision is a positive step towards simplifying the tax regime for professionals. It will help to reduce the compliance burden on professionals and make it easier for them to do business.