TCS on Foreign remittances

1.  Foreign remittances which comes under LRS of RBI

Under LRS, RBI permits individual to remit a selected amount during a financial year to outside India under automatic route that no authorization is require up to define limits. The present prescribe limit is USD 2,50,000 per financial year.

Permissible payment is for foreign visits, medical treatment, education, purchase of property abroad and lots of more are within limit specified above.

2. The New Provision under Section 206C

2.1. On foreign remittances Authorised dealer to collect TCS 5%

An authorised dealer getting a sum or a total of measures of Seven Lakh Rupees or more in a financial year for remittance out of India under the LRS of RBI, will be subject to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of 5%. The rate shall be 10% in non-PAN/Aadhaar cases.

Authorised dealer implies an individual authorised by the Reserve Bank of India under sub-section (1) of section 10 of Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security.

2.2. Seller of Overseas tour program to collect TCS at the rate of 5%

A seller of an overseas tour program package who gets any sum from any purchaser, being an individual who buys such a package, will be obligated to collect TCS at the rate of 5%. The rate shall be 10% in non-PAN/Aadhaar cases.

Overseas tour program package involves any tour package which provides visit to a country or countries or territory or territories outside India and counts expenses for travel or hotel stay or boarding or lodging or any other expense of similar nature or in relation thereto comes under  

From 1st April 2020, the above provisions will be applicable.

3. Exemptions under the Provision

 The above TCS provision will not make a difference

1. If the purchaser has deducted any amount and liable to deduct tax at source under the provision of the Act
2. The Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State,  a local authority as defined in Explanation to clause (20) of section 10 or some other individual notified by the Central Government in the Official Gazette for this purpose subject to such conditions as determined in that notification.

4. End Note

This new provision has been introduced with the motive of capturing data of foreign travels PAN wise which might be utilized to find out the accuracy of salary appeared in ITR. As of late, income tax return filing has been made mandatory for individual having expenditure on foreign travel surpassing 2 Lakhs rupees. They should give their detail of expenditure on foreign travel. The column to specify the passport number is likewise there in ITR form.

From April 1, 2020, 5% (PAN holder) and 10% (non-PAN holder) TCS over and above of total amount of tour package will have to pay by every foreign traveller will have to pay. However, there is a provision that if an individual whose annual income is under threshold limit visits foreign country, then he will be qualified for TCS refund.

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