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Faq On Tcs On Foreign Remittances

TCS is a tax collected on certain transactions including foreign remittances under India's Liberalized Remittance Scheme. The rate of TCS on foreign remittances is 5% of the amount exceeding Rs. 7 lakh until June 30, 2023, and 20% of all amounts from July 1, 2023 onwards without any threshold. TCS is applicable on all modes of remittance like debit cards, credit cards, and cash withdrawals. The collected TCS can be claimed as a tax credit when filing income taxes.

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31 views3 pages

Faq On Tcs On Foreign Remittances

TCS is a tax collected on certain transactions including foreign remittances under India's Liberalized Remittance Scheme. The rate of TCS on foreign remittances is 5% of the amount exceeding Rs. 7 lakh until June 30, 2023, and 20% of all amounts from July 1, 2023 onwards without any threshold. TCS is applicable on all modes of remittance like debit cards, credit cards, and cash withdrawals. The collected TCS can be claimed as a tax credit when filing income taxes.

Uploaded by

specilist officer marketing
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TCS on foreign remittances under Liberalized Remittance Scheme (“LRS”)

Frequently Asked Questions


1. What is Liberalized Remittance Scheme (“LRS”)?

The Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident Indian
individuals to remit a certain amount of money during a Financial Year to another country for
investment, expenditure and other permissible transactions (illustrative list is mentioned below).
According to the prevailing regulations, resident Indian individuals may remit up to an amount equal
to $250,000 per Financial Year.

Illustrative List
✓ Private visit to any country (except Nepal and Bhutan)
✓ Gift or Donation
✓ Going abroad for employment
✓ Maintenance of close relatives abroad
✓ Travel for business, attending international conference, seminar, specialized training, apprentice
training
✓ Expenses in connection with medical treatment abroad
✓ Studies abroad

2. What is Tax Collected at Source (‘TCS’)?

Tax Collected at Source (TCS) is an income tax collected on some specific transactions given in the
Section 206C of the Income Tax Act 1961. This includes TCS on foreign remittances under LRS.

3. What is the rate of TCS?

Sr. Type of Remittance Income tax law till Income tax law from 1 July 2023
No. 30 June 2023 onwards
1 Remittance for education 0.5% of the amount Same
purpose, if amount being in excess of Rs.7
remitted is out of loan obtained lakh.
from notified financial
institutions
2 Remittance for education (other 5% of the amount in Same
than 1 above) or medical excess of Rs.7 lakh.
purpose
3 Any other purpose 5% of the amount in 20% without any threshold (except
excess of Rs.7 lakh below note)

Note: Threshold of Rs 7 lakh is


available for international debit or
credit card transactions.

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4. When will a higher TCS rate is applicable?

TCS shall be applicable at the higher rates under the following scenarios
Sr. Scenarios Higher Rate of TCS
No.
1 If the person is a specified person under TCS shall be applicable at higher of-
Income tax Act (i.e. he/ she has not filed - 5%
income tax return for last year and - Twice the rate mentioned under the Act,
TDS/TCS for the year is more than Rs. subject to 20% Max.
50,000)
2 If PAN and Aadhaar are not linked - 20%

5. Modes on which TCS is applicable.

TCS is applicable on foreign remittances through all modes like debit cards, credit cards, forex cards,
branches, foreign ATM cash withdrawals, etc.

6. Is there any exemption or threshold from levying TCS?

Law till 30th June 2023

Till 30 June 2023, there is a threshold of Rs. 7 Lakh. TCS is to be collected only when the total foreign
remittances from all modes (trade forex team, debit card, credit card, etc.) exceeds Rs 7 lakh. Further,
TCS is to be collected only on the amount exceeding Rs 7 Lakh.

Law from 1st July 2023 onwards

From 1st July 2023 onwards, the threshold of Rs 7 Lakh is applicable only for

- Foreign remittance for medical or education purpose.


- International debit and credit cards transactions.
There is no threshold if the foreign remittance is for a purpose (other than education and medical)
and mode of remittance is from branches.

7. TCS will be applicable for ATM or POS or e-commerce transactions?

TCS will be applicable on all ATM, POS and E-commerce transactions.

8. Whether TCS on foreign remittance under LRS is applicable to Non-residents?

No, subject to condition that a No Permanent Establishment (“NO PE”) certificate is received from the
non-resident.

9. Can I avail tax credit on TCS?

Yes, tax credit of the TCS amount can be claimed.

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TCS amount will appear in Form 26AS of the customer and the same can be claimed as a tax credit at
the time of filing income tax return. For persons who are not liable to pay any taxes, can claim refund
of the TCS in their income tax return.

10. Will GST be applied on the TCS amount?


GST will not be applicable on the TCS amount.

11. Is there any separate threshold limit of Rs. 7 Lakhs for debit card and credit cards.

No. The threshold of Rs. 7 Lakh is a combined limit.

12. Foreign transaction using Debit Card/ Credit Card has been reversed (i.e. transaction is cancelled or
part cancelled). What will happen to the TCS levied for those transactions?

TCS once collected cannot be refunded by the Bank in case of any return of transaction or remittances.
TCS credit can be claimed by the customer at the time of filing the Income Tax Return.

13. Whether TCS will be applicable on corporate cards?

No.

Disclaimer
Above FAQs are only easy compilation of all the provisions of the law for convenience of the customers
and the Bank does not claim legal validity of the same. Customers should act upon after taking a proper
legal advice on the same.

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