The Ministry of Finance (MOF) has recently issued a press release on June 28, 2023, announcing significant changes in the rates of Tax Collected at Source (TCS) on remittances made under the Liberalised Remittance Scheme (LRS) which is part of the Foreign Exchange Management Act (FEMA) 1999 which lays down the guidelines for outward remittance from India. Under LRS, all resident individuals, including minors, are allowed to freely remit up to USD250,000 per financial year (April – March). This can be for any permissible current or capital account transaction, or a combination of both.
The implementation of changes in the rates of Tax Collected at Source (TCS) on remittances made under the Liberalised Remittance Scheme (LRS) changes, originally scheduled for July 01, 2023, has been extended to October 01, 2023. This decision aims to provide individuals with more time to adapt to the new regulations. Let’s delve into the revised TCS rates and the implications of these changes.
Revised TCS Rates from October 1, 2023:
- The TCS rate as mentioned in the second column will be applicable until September 30, 2023.
- Expenditures under LRS under sub-section (1G) will not attract TCS for the first Rs 7 lakh, regardless of the purpose.
- No TCS will be applicable on credit card spends made outside India.
- Under Section 139AA of the Income Tax Act, 1961, it is mandatory to link PAN with Aadhaar. Failure to do so will result in an inoperative PAN and TCS will be charged at the rate specified in Section 206CC of the Act.
- Resident Individuals falling under the ‘Specified Person’ category, non-PAN cases, or inoperative PAN cases will be subjected to double the normal TCS rate or 5%, whichever is higher. However, the TCS rate will not exceed 20%.
These changes are aimed at ensuring better compliance with tax regulations while providing a clear framework for individuals making remittances under the LRS. It is important for individuals to be aware of these revised TCS rates and other related provisions to avoid any unexpected financial implications.
As the October 1, 2023 implementation date approaches, individuals are advised to review their remittance plans and understand the revised TCS rates to make informed financial decisions. The extended timeline provides an opportunity to align with the new regulations seamlessly.
Still have doubts At Proptech Solutions, we’re more than just property managers – we’re your partners in financial well-being. Reach out today, and let’s embark on a journey of understanding and success together.
In conclusion, the Ministry of Finance’s decision to revise the TCS rates for remittances under LRS reflects the government’s commitment to maintaining a transparent and efficient tax framework. As taxpayers, staying informed about these changes and complying with the regulations will contribute to a hassle-free experience while making international remittances.