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TCS clarification

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Manav

consultant

11 Points Posted on 08 February 2023

Hello fellows,

I have recently migrated overseas and became a NRI as per the tax law. I hold resident savings account which I am planning to convert to NRO on my visit to India next month.

I have around 20L funds in the resident savings accounts which I want to repatriate overseas to my overseas bank account.

However, I am not sure in which order I should repatriate my money to minimize the TCS

1) First repatriate money from resident account to overseas by wire transfer and then convert the resident account to NRO

2) First convert resident account to NRO and then transfer.

Any other suggestions are welcome if you know a better way

Thanks.

Replies (2)

Quick Summary

This discussion addresses how to repatriate funds from India to an overseas account after becoming an NRI, specifically concerning Tax Collected at Source (TCS). The original poster, having migrated overseas, seeks advice on the optimal order for converting their resident savings account to an NRO account and transferring funds to minimise TCS implications. A Chartered Accountant clarifies that converting the savings account to NRO first and then repatriating funds is advisable, as transfers from NRO/NRE accounts are generally not subject to TCS under the USD 1 million scheme, unlike direct transfers from a resident account.

CA Sorav Gupta

Chartered Accountant

1005 Points Posted on 08 February 2023

Hi Manav

1) If you will follow option 1, then TCS u/s 206 C(1G) will be applicable @ 5% on the amount transferred in excess of Rs. 7 lakhs during the Financial year.

2) In option 2, funds transferred by NRIs from their NRO/NRE A/c are not subject to TCS u/s 206 C(1G) as the same will be covered under USD 1 million scheme.

Hence, you are hereby suggested to convert your existing savings A/c to NRO A/c & then repatriate the funds outside India. In this case, TCS shall not be applicable to you.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
ACA. Sorav Gupta
(Practicing Chartered Accountant)