Foreign Transactions Rule: From July 1, 2023, there is going to be a change in the tax rules on foreign transactions. In such a situation, you must know that what is the new rule…
Foreign Transactions: Such people who are transferring money abroad for their studies to children, relatives or for any work, then it is very important for you. Actually, the Income Tax Department is going to change the tax rules on the amount sent abroad from 1 July 2023. If you also do foreign transactions, then know here how much TCS you will have to pay on foreign transactions from July 1.
Know how much TCS will be deducted
TCS deduction of 20% will be done on the money sent abroad. This change will come into effect from 1 July 2023. Please tell that this decision has been taken under LRS. If you send money outside the country for medical or studies, then you will have to pay 5 percent TCS. According to the information, TCS is deducted on transactions of more than 7 lakhs.
Know what is the new rule
From July 1, TCS of 20 percent will be deducted on sending money abroad. If you send more than 7 lakh money for medical or education, then you will have to pay TCS of 5 percent.
Suppose you send Rs 10 lakh to someone abroad, then you will have to deposit Rs 12 lakh in the bank. This extra Rs 2 lakh will be the TCS applicable on this transaction. However, you can take the benefit of tax exemption on it. For this, you can claim as tax credit while filing ITR.
Know how much benefit is available
If you get tax benefit of up to Rs 3 lakh, then you will have to pay only Rs 1 lakh, as Rs 2 lakh will be claimed as tax credit in the form of TDS.
Purpose of change
- The purpose of the change in the rule is to keep an eye on foreign transactions.
- To maintain foreign exchange reserves.
- reduce money laundering
- raising tax revenue
- Changes are being made to file more income tax returns.
