20% TCS on foreign remittances from October 1: Know how it will impact your forex payments, international trips, and education
New TCS rates could add a significant tax burden on you if you decide to spend more than the specified threshold. The increased rates of 20 per cent TCS will not be applicable for remittances up to Rs 7 lakh in a financial year.
The new rates of tax collected at source (TCS) under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India will be applicable from October 1, 2023. You will now have to pay a higher TCS amount in case you spend more than a specified amount during a financial year with regard to international trips, going abroad for higher studies or making a credit card payment for a purchase from a foreign country, among others.
It’s important to understand how the enhanced tax rates on foreign remittances will impact your expenses on education abroad, foreign trips and forex payments to avoid any financial uncertainties.
New TCS rates on foreign remittance for education
Under the Liberalised Remittance Scheme (LRS), no TCS would be charged on up to Rs 7 lakh of foreign remittance spent on education. In case the remittance above Rs 7 lakh is paid via a loan from an authorised financial institution then a TCS of 0.5 per cent would be levied. While, remittances of more than Rs 7 lakh spent on foreign education would attract a TCS of 5 per cent from October 1, 2023. Moreover, the amount spent on travelling for foreign education would also be taxed at the same rate if the threshold of Rs. 7 lakh is crossed.
Assembly Election Results 2023 today: Vote counting for Rajasthan, Madhya Pradesh, Telangana and Chhattisgarh to begin on Sunday at 8 am
MP Assembly Election Results 2023: Shivraj Chouhan, Kamath Nath, Narendra Singh Tomar, and other strong candidates of Madhya Pradesh
Rajasthan Churu Election Result 2023: Harlal Saharan of BJP up against Rafiq Mandelia of Congress — who will emerge winner?
Rajasthan Jhotwara Election Result 2023: Rajyavardhan Singh Rathore of BJP up against Abhishek Choudhary of Congress — who will emerge winner?
COP 28 Summit: India, China refrain from signing pledge to triple world's renewable energy capacity by 2030
Rajasthan Nathdwara Election Result 2023: Kunwar Vishwaraj Singh Mewar of BJP up against CP Joshi of Congress — who will emerge winner?
Rajasthan Tonk Election Result 2023: Congress' Sachin Pilot battles it out against Ajit Singh Mehta of BJP — who will emerge winner?
Revised TCS rates for medical expenses
A 5 per cent TCS would be charged on any foreign remittance for medical expenditure if the cost is higher than Rs 7 lakh. Also, any travel expenses related to foreign treatment will also be taxed at the same rate from October 1, 2023.
TCS rates for overseas tour package
An overseas tour package would also attract TCS. However, the catch is that even if the money spent on these packages is lower than Rs 7 lakh, one is liable to pay the taxes. If the tour package is priced below the threshold, the TCS deducted would be 5 per cent. Conversely, if the expenditure is over Rs 7 lakh, 20 per cent TDS would be levied from October 1, 2023.
What are the TCS rates for foreign investments?
If you're an investor in foreign stocks, crypto or mutual funds then be ready to pay TCS of 20 per cent from October 1, 2023, if your investments exceed Rs 7 lakh in a financial year. On the other hand, if you have invested in Indian mutual funds that deal in foreign investments, it won't be considered as a remittance under the LRS scheme and hence, wouldn't attract any TCS.
TCS on debit, credit, and forex cards
The payments made by credit cards don't come under the scope of the LRS. However, payments made using debit, credit or forex cards do come under the ambit of LRS and if you pay more than Rs 7 lakh using these cards then TCS will be applicable at 20 per cent.