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Form 12BAA

New Form 12BAA: Claim TCS Credit for Parents of Students Studying Abroad.

This new development for parents sending children abroad for higher education has brought into the system a Form 12BAA to enable them to claim TCS credits on remittances made. This, though, comes into effect in October and differs from the earlier one, wherein the students were only allowed to claim a refund on the amount collected as TCS. This provision not only lightens the financial burden of the parents but also opens avenues for those who have traveled abroad to reclaim TCS payments.

What is Form 12BAA?

This is a newly announced tax form through which the parents will claim TCS credit in their return of income. The new form makes it easier for the parents having more than ₹7 lakh expenditure incurred in a year for education outside India to take the credit of 5 percent TCS paid. This benefit was earlier only available to the students, but now parents can also take the same advantage.

Step-by-Step Process for Claiming TCS Credit

Declaration Submission: Parents have to submit a declaration to the tax collection authority, and they have to mention what bank or institute collected that TCS amount.

Clear Identification: The declaration must clearly indicate that the refund for credit TCS was incurred against a different Permanent Account Number.

The parents are required to add their name and address, along with proof of identity, the name of the child, and his identification proof.

TCS: Amount paid as fees for overseas studies or expenses for traveling is also required to be added.

Financial Information: In the Central Budget 2024, it has been decided that the details of TDS and TCS deducted on income other than salary from sources are required to be made available on Form 12BAA. Benefits from the New Provision.

The introduction of Form 12BAA is going to bring in the following benefits:

Relief from Tax: Parents can now reduce their tax liability by availing their credit against TCS credits, thus better arranging finances.

Ease of Accessibility: With this change, claiming TCS is going to be quite easy as parents would get their credited amount without cumbersome procedures.

In other words, the new form will make taxpayers report TDS and TCS deducted on a variety of income sources, which includes fixed deposits, commissions on insurance policies, dividends on share investments, and even GST paid during the purchase of any vehicle or involving the exchange of foreign currency.

Conclusion

Now, with the arrival of Form 12BAA, there is relief and support from the government for parents whose children are studying abroad, claiming TCS credits will improve their capacity to manage educational expenses better.
For parents who make a roundabout journey in sending their children abroad for education, an understanding and use of Form 12BAA can save significant taxes and make it financially a more pleasant journey.

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