Quick Summary
The e-Gazette notification dated May 16, 2023 omits Rule 7 of the FEM(CAT) Rules, 2000. Here are the Frequently Asked Questions (FAQs)w.r.t. Tax Collection at Source (TCS) on foreign remittance through the Liberalised Remittance Scheme. Part A. Some clarifications on Tax Collection at Source
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FAQ :
Under the LRS, resident individuals can freely remit up to USD 2,50,000 per financial year for permissible current or capital account transactions. This scheme is not available to corporates or other entities.
TCS is mandated by Section 206C of the Income-Tax Act 1961, specifically sub-section (1G), which covers TCS on foreign remittances through the LRS and on overseas tour packages.
No, there are no changes to the TCS rates for remittances made for education or medical treatment. The rate remains 0.5% if the remittance is a loan from a financial institution, and 5% otherwise, up to a threshold of 7 lakhs.
From July 1, 2023, the TCS rate for overseas tour packages has increased to 20% from the previous 5%. There is no threshold limit for this rate.
The notification omits Rule 7 of the FEM(CAT) Rules, 2000, removing the exemption for using international credit cards for expenses while abroad. Such usage is now treated as part of the LRS.
No, only remittances covered under the Liberalised Remittance Scheme (LRS) are liable for TCS. Other types of foreign remittances are not affected.
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