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TCS responsibility on Foreign Remittance

H (D) (50 Points)

22 November 2021

Foreign Remittance being done by me under LRS in installments for fees of my son studying in US, recently exceeded Rs. 7 Lakhs when I made last payment of Rs. 1.5 Lakhs. However, no TCS was deducted though I had declared the total amount paid so far in USD, while processing the payment through a third party payment service.

Is it so because I had declared my PAN in this transaction and since I am already having regular TDS being done from my salary, hence TCS was not applied

I am supposed to calculate 5% TCS and pay it online on IT Department's website myself.

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5 Replies

CA Raj Doshi (Practising CA) (8820 Points)
Replied 23 November 2021

You are not required to pay tcs on your own. Also, tds deduction from Salary does not mean tcs is not applied.

The bank through which you remitted the fees is required to collect tcs.

The limit of 7 lakhs is per bank per PAN per financial year

H (D) (50 Points)
Replied 23 November 2021

Thanks for your kind clarification. However, if the limit of Rs. 7 lakhs is per bank, will it be any sort of violation if same PAN holder carries out Foreign Remittance of under Rs 7 lakhs each from two different bank accounts and the respective banks do not deduct TCS as none of the two bank transactions exceed Rs 7 lakhs?

(As I understand, Foreign Remittance under LRS is restricted to be done from one bank account only if it is a capital transaction. For non-capital transactions, say educational expenses, it can be done through a combination of bank accounts, credit card, debit card etc. , as it normally happens.)

CA Raj Doshi (Practising CA) (8820 Points)
Replied 23 November 2021

No violation if paid from 2 different banks.

I am unaware about LRS restriction for payment through one bank only for capital account transactions.

Rammohan (NA) (245 Points)
Replied 23 November 2021

It is better to make the money transfer through your bank. If you had declared the total amount of foreign remittance made during this FY, and if this exceeded Rs 7 lacs (including the latest remittance), then the remitting institution has to collect TCS (on the amount exceeding Rs 7 lacs) from you and remit the TCS amount to the Income-Tax Department. Most banks require customers to declare the details of all previous foreign remittances under the LRS made through any authorised dealer/bank. The limit is calculated on the total remittance in a FY through all authorised dealers/banks, and not per authorised dealer/bank.

It is better to contact the authorised dealer through whom you made the remittance in question, and find out why they did not collect the TCS amount from you at the time of the remittance.

JJJ (Need help) (673 Points)
Replied 23 November 2021

It is the AD's responsibility to determine the TCS and deposit it with the tax department. If they don't do it the burden will be on them.

However they usually ask you to give a declaration regarding any other remittances you have made during the year. If they did not ask for one you should be safe. But if they did and you did not provide the correct information they could use that if questioned.