CMA Intermediate · Direct and Indirect Taxation · Tax Deducted at Source and Tax Collected at Source
Gupta Travels sells an overseas tour programme package to Anil for ₹6,00,000 and collects TCS under section 394 of the Income-tax Act, 2025 as amended w.e.f. 1-4-2026. The TCS collected is:
TCS is ₹12,000, being 2% of ₹6,00,000. As amended from 1 April 2026, the Table in section 394(1) fixes a flat 2% rate on sale of an overseas tour programme package and the earlier 5% and 20% split no longer applies.
- ANil, as the amount is below ₹10 lakh
- B₹30,000
- C₹12,000Correct
- D₹1,20,000
Explanation
Sl. No. 8 of the Table in section 394(1) prescribes a flat 2% on sale of an overseas tour programme package, with no threshold. TCS = 2% × ₹6,00,000 = ₹12,000. The ₹30,000 option uses the old 5% rate for amounts up to ₹10 lakh, and ₹1,20,000 wrongly uses 20%.
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