Different TCS rates will
apply for the first and second halves of the financial year, but the Rs 7 lakh
threshold will apply for the entire year.
Medical expenses
For those seeking medical treatment abroad, a 5
percent TCS will be applicable if the amount crosses Rs 7 lakh.
Tour packages
Purchasing overseas tour packages, even below Rs 7
lakh, will now incur a 5 percent TCS starting from October 1, 2023. For
packages exceeding Rs 7 lakh, the TCS rate will be 20 percent.
Investments
Investing more than Rs 7 lakh in foreign stocks,
mutual funds, cryptocurrencies, or property during a financial year will
trigger a 20 percent TCS. However, domestic mutual funds with foreign stock
exposure are exempt.
Debit/credit/forex cards
Credit card transactions will be exempt from TCS.
On the other hand, debit and forex card transactions will be subject to TCS if the spending exceeds Rs 7 lakh,
with a 20 percent rate from October 1, 2023.
Multiple sources
If someone utilises multiple banks or dealers for
remittances within a year, the Rs 7 lakh threshold will apply to the total
amount spent across all sources, rather than individually for each source.
Educational expenses
When sending money abroad for education, no TCS
will apply on remittances below Rs 7 lakh. If it exceeds Rs 7 lakh and is
financed through an approved financial institution's loan, a 0.5 percent TCS
will be applicable. Without a loan, it incurs a 5 percent TCS.
"The new rule will not have much impact on
remittances for foreign education. If the money sent for foreign education
crosses the threshold of Rs 7 lakh which is financed by a loan, it will attract
a TCS of 0.05 percent, which remains the same as per the current rule. Whereas,
for remittances beyond the threshold limit, not obtained through a loan will
attract TCS of 5 percent and not 20 percent as applicable for other expenses.
In case parents wish to remit money beyond the threshold limit, they will have
to take permission from RBI,"
"Imagine the college fee for education abroad
is Rs 25 lakh, and the source of funding isn't a loan. In such a scenario, a
TCS of 5 percent is applied to the amount exceeding Rs 7 lakh, which calculates
to Rs 18 lakh (Rs 25 lakh-Rs 7 lakh), resulting in a TCS of Rs 90,000. Now,
when you file your income tax return, you realize that your tax liability
amounts to Rs 2,90,000. In this situation, you have the option to offset your
tax liability by the amount of TCS paid. This adjustment will reduce your net
tax liability to Rs 2 lakh (Rs 2,90,000 -Rs 90,000),".
Typically, banks furnish a TCS certificate upon deduction.
Individuals can utilize this certificate either to lower the tax liability or
to claim a refund if the tax liability is less than the TCS amount deducted.
Alternatively, they can seek assistance from the accountant to retrieve the
necessary details from the income tax website.
Earlier and new TCS rates
are summarised as under:
|
Nature of payment (1) |
Earlier rate before Finance Act, 2023 (2) |
New rate from October 1, 2023 (3) |
|
LRS for education financed by |
Nil up to Rs 7 lakh 0.5% above Rs 7 lakh |
Nil up to Rs 7 lakh 0.5% above Rs 7 lakh |
|
LRS for Medical treatment/ education (other than
financed by loan) |
Nil up to Rs 7 lakh 5% above Rs 7 lakh |
Nil up to Rs 7 lakh 5% above Rs 7 lakh |
|
LRS for other purposes |
Nil up to Rs 7 lakh 5% above Rs 7 lakh |
Nil up to Rs 7 lakh 20% above Rs 7 lakh |
|
Purchase of Overseas tour program package |
5% (without threshold) |
5% till Rs 7 lakh, 20% thereafter |
(Source: Ministry of Finance)
Our Services:
Filing: GST, TDS, ROC, Income Tax (All cases including trust, Society, Sec 8 Company), Firm Annual Return, Financial Audit, Excise Duty, Customs,
Compliances: ROC compliances, other compliances, Board Meeting Compliances
Other Filing required for government time to time.
Accounting and Book-keeping (including Payroll).
Best regards,
Koilraj Aaron (MD)Saron Consultancies India Pvt Ltd, Chennai
Ct: 917010345538 + Whatsapp
Office Number: 044-35564812 + Whatspp
Mail: info@sarontax.com
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