20% TCS levied on certain foreign remittance transactions
T
ax collection at source (TCS) on certain remittances abroad has been hiked to 20 per cent.
Arihant Bardia, CIO and Co-founder, Valtrust, said another important change is on the Liberalised Remittance Scheme (LRS).
"Earlier, all outward LRS exceeding Rs 7 lakh in a financial year attracted a TCS of 5 per cent. The TCS will now be 20 per cent if it is for a purpose other than for education or medical treatment. This implies that LRS for foreign travel, investments etc. will now attract a TCS of 20 per cent. And this applies without any threshold limit. Time to max out the LRS before March 31, 2023," said Bardia.
In order to increase TCS on certain foreign remittances and on sale of overseas tour packages, amendment is proposed to the Sub-section (1G) of Section 206C of the Act, the Finance Bill said.
This amendment will take effect from July 1, 2023.
The rate of TCS for foreign remittances for education and for medical treatment is proposed to continue to be 5 per cent for remittances in excess of Rs 7 lakh.
Similarly, the rate of TCS on foreign remittances for the purpose of education through loan from financial institutions is proposed to continue to be 5 per cent in excess of Rs 7 lakh.
However, for foreign remittances for other purposes under LRS and purchase of overseas tour programme, it is proposed to increase the rates of TCS from 5 per cent to 20 per cent.
✔️ 20% TCS levied on certain foreign remittance transactions
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