There will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs 7 lakh per individual per annum, ministry added.
Budget 2023 has raised Tax Collection at Source (TCS) on foreign remittance through Liberalised Remittance Scheme (LRS) to 20 per cent from the existing 5 per cent, except in certain cases. The higher rate of TCS was about to kick in from July 1, 2023.
Under LRS, an individual can remit up to $250,000 in a financial year. One can remit money overseas for expenses such as travel, business trips, going abroad for employment, medical purpose, education, gift or donation, emigration, maintenance of close relatives, and any other current account transactions (CAT) as per Rule 5 of the Foreign Exchange Management (CAT) Rules, 2000. Now, TCS is applicable on all foreign remittance transactions that come under LRS. However, the rates of TCS vary depending on the nature of transaction.
All overseas outward remittances (bank account transfer, foreign exchange, loading forex card), except for medical and educational purposes and overseas tour packages, made via LRS will attract TCS at 20 per cent, starting from October 1, 2023, 2023.
Earlier in May, the Ministry of Finance said brought international credit card spends under LRS of the Reserve Bank of India (RBI). However, a TCS of 20 per cent will only be levied on individual payments of above Rs 7 lakh using debit and credit cards in a financial year from July 1, 2023. TCS is not a tax by itself. It will be adjusted against the tax on income while filing the income tax return.
