INDIAN TAX COMPLIANCE
1. What is Form 12BAA?
A newly introduced tax form (effective Oct 2024) enabling parents to claim TCS credit on foreign remittances made for educational purposes. Earlier, only the student was eligible to claim the TCS credit.
2. Who Benefits from Form 12BAA?
- Parents and guardians who remit funds abroad, especially for their children’s education, are the primary beneficiaries.
- If you’re sending more than ₹7 lakh in a financial year for education purposes, a 5% TCS is levied on the amount exceeding ₹7 lakh
3. How to Claim TCS Credit Using Form 12BAA?
- Declaration – Get a declaration from the bank or institution that collected the TCS, indicating the amount of TCS collected and paid.
- Submission – Your full name and address as per your PAN details.
- Submit to Tax Collector: Submit the declaration to the tax collector (bank or financial institution), who will verify the details and credit the TCS amount to your PAN.
- Verification – Once verified, the TCS credit will be applied to your PAN, allowing you to claim it in your tax filing for the financial year.
Example:
- Tcs claims for Foreign Education
- Remittance –Rs 20 lakh for tuition fee
- TCS charge-Rs 65k (5% of Rs13 lakhs exceeding Rs7 lakh threshold)
- Claim Benefit- parent can use Rs 65K TCS credit to offset their tax liability
4. Key Benefits of Form 12BAA
- Direct Claim for TCS Credit: Parents can now claim the TCS credit, reducing their tax burden.
- Simplified Process: No need for the student to file for TCS credit. Parents can directly claim it.
- Flexible Tax Planning: Parents can use the TCS credit against their other incomes, such as dividends, interest, or insurance commissions.
- Greater Savings: This form offers significant tax savings for parents funding their children’s education abroad.
5. Frequently Asked Questions (FAQs) on Form 12BAA and TCS Credit
Q) Can I claim TCS credit for remittances other than education?
A) Yes, TCS credit can also be claimed for other remittances, such as travel expenses or property purchases, as long as proper documentation is submitted.
Q) Do I need to submit a separate Form 12BAA for each remittance?
A) Yes, a separate form must be submitted for each remittance where you are claiming TCS credit, along with the corresponding declaration from the tax collector.
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