(First published in The Hindu Business Line: https://www.thehindubusinessline.com/news/budget-proposal-to-remove-tcs-provision-major-relief-to-foreign-investors/article69173082.ece)
My take, as quoted in The Hindu Business Line, on removal of tax collection at source, particularly with respect to streamlining acquisitions by foreign buyers:
“Since foreign buyers often do not have an Indian presence or Indian-sourced income or return filing obligations, they could not claim credit for the TCS, leading to a lapse of the tax collected by the seller.
To be clear, buyers with a turnover exceeding ₹10 crore will still be required to deduct TDS under Section 194Q at 0.1 per cent on payments above ₹50 lakh made to resident sellers, except when the acquirer is a foreign buyer not having a permanent establishment in India.
The combined effect of the removal of 206C(1H) and the exception under 194Q will help streamline cross-border share acquisitions by mitigating compliance burdens and reducing friction in fund flows for foreign buyers.”