You can expect a new tax rule that will be charged on the remittances. This has come in the application for some time now. There has been some confusion about the latest tax rule for some time, but you will not have to fret over anything. This write-up will have all the answers to your questions. When you look at the new rule, you will find that a total of 5% tax collected at source shall be applicable. This will apply to all remittances that will cross INR 7 lakh mentioned in RBI’s Liberalized Remittance Scheme. The Tax collected at sources on all the forex transactions came into effect from October 1.
For all the remittances which will carry all the purpose of international education, Tax collected at source, also known as TCS, shall be applied at the rate of 0.5%. This will be only applicable if the remitted amount will originate from a loan that will be obtained from a financial institution. When you do payments for the foreign tour packages, your payment shall also get a 5% TCS. For the non-residential Indians, there is some good news. The new TCS rule shall not be applied at the time of transactions. This rule will apply to the residents of India.
It would be best if you took note of the things that are applied to Indians. This can include that TCS shall apply to the payment that exceeds INR 7 lakh. This amount has been a part of the fiscal year. This is not the complete amount. For instance, if a person transfers INR 9 lakh in a given financial year, the TCS rule shall be applied to the additional INR 2 lakh. This will be applied at a 5% rate.
Also Read: 5% Tax On Foreign Fund Transfer From October 1, 2020
Tou should also note that TCS will not be an additional charge. This can also be adjusted against the complete income tax liability and is also claimed when filing tax returns. You will also be able to claim for refund. This can be done only if the remittance is derived from the income tax deducted at the source.
Learn the Liberalized Remittance Scheme
An individual that is a resident will be able to transfer Money to another country. The amount cannot exceed the limit of 2,50,000 dollars every financial year. This will fall under the Liberalized Remittance Scheme. The RIB created this scheme. This scheme limit will be carried out through a single transaction and also through multiple transactions.
Frequently Asked Questions
What is the date of implementation and execution of the new tax implication?
The new tax implication provision on the foreign remittance was revised on April 1, 2020, and lasted until October 1, 2020.
What transactions shall be affected by the new TCS provision?
All the remittances of more than 7 lakh in Indian rupees in each financial year will be included in the LRS. This shall be liable for 5% TCS. This will exclude the education payment that will only be paid through a bank loan and approved by any financial institution by the Reserve Bank of India. This rate shall be brought down from 5% to 0.5%.
Will any GST be applicable on the 5% TCS?
There will be no GST applicable on the TCS. GST shall be charged only when the people would convert the country currency. They will also use a remittance service.
What is the different purpose of tax collection?
The Tax shall be applied on all the remittances that are outside India. All the remittances should fall in the Liberalized Remittance Scheme Scheme the RBI.
What type of Tax will be applied for all the Non-PAN transactions?
The Tax collected at source, and the Non-PAN payments shall be 10%. However, you must know that all the LRS transactions are not possible without having PAN.
Will the TCS on all the foreign remittance in the Liberalised Remittance Scheme shall be applied on the complete amount of remittance of an additional 7 Lacs in INR?
TCS will be applied to the amount if it exceeds seven lakhs in every financial year. This will not be applied to the complete amount.
Can the TCS get refunded back?
When you pay TCS, you cannot look for a refund. The refund is only made if it can be claimed during the time of any IT returns. If the cumulative Tax will be less than the paid amount. There will be no TCS applied for any encashment and unloading orders.
Will TCS be applied if a Resident of India will transfer to a non-residential Indian Account as a gift or a Loan mentioned in LRS?
No TCS will be applied on any of the transfers as long as it does not cross the 7,00,000 rupees limit in each financial year.
What will be the latest tax implication for the remittances when pursuing international education?
For any remittances that shall be carried by the purpose of international education, the TCS shall be applied at the rate of 0.5%. This will only be for the payment remitted that will be originating by the loan you can get from a financial institution.
What shall be the tax implication when the Money remitted for international education is done by savings rather than loans?
5% TCS shall be applicable on the remittances that cross INR 7 lakhs in one financial year mentioned in LRS.
What will be the tax implication for all the remittances when there is a Foreign Tour Operator?
TCS will be applied at a 5% rate after the funds’ amount crosse 7,00,000 rupees limit in each financial year.
Will TCS be applied when foreign exchange facility will be availed in Forex cards or cash?
TCS shall be applied. TCS will be charged at the rate of 5% if foreign exchange currency will be obtained when withdrawing cash or reloading the forex card.
What about minor accounts and their utilization?
If your PAN is updated for the account of the Minor, the limit shall be utilized. TCS shall be collected but only in the name of the guardian.
How can you Save Money for foreign money Transfers?
With the latest 5% TCS rule on all the remittances, it shall become more significant to cut all the costs and expenses even if you could claim for all the tax refund at the payment time. This can be very important for saving Money if you make the foreign money transfers and payments from India. Nine Two Nine Forex can help you with all your foreign exchange and transfers.
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