FAQ on applicable TCS rates subsequent to Spending on International Credit Card on foreign trip expenses brought under FEMA Rules
Finance Ministry issue Frequently Asked Questions (FAQs) on Tax Collection at Source (TCS) on foreign remittance through the Liberalised Remittance Scheme (LRS) subsequent to The e-Gazette notification dated 16th May 2023 which omits Rule 7 of the FEM(CAT) Rules, 2000.
Ans. Section 206C of the Income-Tax Act 1961 provides for TCS in the business of trading in alcohol, liquor, forest produce, scrap etc. Sub-section (1G) of the aforesaid section provides for TCS on foreign remittance through the Liberalised Remittance Scheme and on the sale of overseas tour packages.
Ans. No. Only such remittances which are covered under LRS are liable to TCS.
These have been detailed in the answer to O (5) in Part B of the clarifications.
Ans. The reasons for the amendment are:
Ans. The TCS rates with the changes brought about in Finance Act 2023 are tabulated as under:
(i) Remittance for the purpose of any education [NO CHANGE]
Old Position (up to 30.6.23) |
After Finance Act 2023 (from 1.7.2023) |
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Nature | Threshold | Rate | Threshold | Rate |
If the amount being remitted out a loan obtained from any financial institution as defined in section 80E | 7 lacs | 0.5% | 7 lacs | 0.5% |
Remittance is not out of loan from a financial institution | 7 lacs | 5% | 7 lacs | 5% |
(ii) Remittance for the purpose of any medical Treatment (NO CHANGE)
Old Position (up to 30.6.23) |
After Finance Act 2023 (from 1.7.2023) |
|||
Nature | Threshold | Rate | Threshold | Rate |
Remittance is for Medical Treatment | 7 lacs | 5% | 7 lacs | 5% |
(iii) Sale of Overseas tour package
Old Position (up to 30.6.23) |
After Finance Act 2023 (from 1.7.2023) |
|||
Nature | Threshold | Rate | Threshold | Rate |
Remittance is for the purchase of a tour package | Nil | 5% | Nil | 20% |
(iv) Any other Remittance (for Bonds, shares, real estate gifts etc.)
Old Position (up to 30.6.23) |
After Finance Act 2023 (from 1.7.2023) |
|||
Nature | Threshold | Rate | Threshold | Rate |
Remittance is for any other purpose | 7 lacs | 5% | Nil | 20% |
Ans. For TCS on remittance for travel and incidental expenses related to education and medical treatment, the rates of TCS as applicable to remittances for education and medical treatment, respectively, shall apply. A detailed clarification will be issued separately
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