TCS to be levied on foreign tax remittances: All you need to know
Starting October 1, any amount being sent abroad to buy foreign tour packages, as well as every other foreign remittance of over Rs 7 lakh, will attract a tax-collected at source (TCS), unless the remittance is from an income that is already tax-deducted at source (TDS).
The Reserve Bank of India’s (RBI) liberalised remittance scheme (LRS) allows an individual to remit up to $250,000 every year. The provision to collect tax on remittances was introduced in the Finance Act 2020.
Here’s all you need to know about the TCS:
• A TCS of 5% was announced in Union Budget 2020. This rate is for foreign tour packages; for, other foreign remittances, it will apply only for an amount exceeding Rs 7 lakh.
• However, in case of education-related foreign remittances funded by loans, a TCS of 0.5% will be levied for an amount above Rs 7 lakh.
• While the rate of TCS is 5%, it will be 10% in case PAN or Aadhaar is not provided to an Authorised Dealer of the foreign exchange in question. In case of foreign travel, the TCS is collected by the travel operator.
• The TCS will not be applicable if you make all arrangements of foreign tour on your own. It will also not apply if the remitter is subject to the TDS, under the Income Tax Act, 1961.
• If tax has already been paid as TDS, and still the TCS is levied, you can claim a refund from the TCS.