TCS Latest Update: Earlier, the government had decided to implement TCS at the rate of 20 per cent on LRS and foreign tour packages from July 1. Further, international credit card usage abroad has been kept out of LRS, hence it will not be subject to TCS.
TCS New Rules: The Finance Ministry has postponed the date of implementation of higher Tax Collected at Source (TCS) rate on expenses incurred under the Liberalized Remittance Scheme (LRS) and foreign tour packages till 30 September i.e. now the new rate will be applicable from 1 October. will be effective.
Earlier, the government had decided to implement TCS at the rate of 20 per cent on LRS and foreign tour packages from July 1. Further, international credit card usage abroad has been kept out of LRS, hence it will not be subject to TCS.
During this, a limit has also been fixed by the government. According to this, TCS of 5 per cent will be applicable on foreign tour packages for which up to Rs 7 lakh has been paid. If this limit is exceeded, then 20 percent fee will be imposed from October 1.
At present, TCS of 5 per cent is applicable on foreign tour packages and LRS expenditure of more than Rs 7 lakh. Although there is still confusion about the new rules of TCS, but here we have tried to answer some questions related to it –
What is LRS scheme?
Under the LRS scheme, the RBI allows residents to spend money abroad up to prescribed limits for investment and expenditure including travel, education, medical treatment and purchase of securities and physical assets.
Why have the dates of hike been postponed?
The government has decided to give adequate time to banks and card networks to prepare necessary IT based solutions. The government has decided to postpone the decision to implement its e-gazette notification dated May 16, 2023.
What do the new TCS rules mean?
No TCS will be levied on all remittances up to Rs 7 lakh, except foreign tour packages. During this time, if up to Rs 7 lakh is spent on foreign tour packages, then five percent TCS will be imposed on it. While 20 percent TCS will be levied on the amount above Rs 7 lakh.
Meanwhile, the TCS rate under LRS for other works will also increase from the existing five per cent to 20 per cent with effect from October 1, while health and education remittances, beyond the limit of Rs 7 lakh, will continue at the earlier rates of five per cent or 0.5 per cent.
What is the rule on International Credit Card?
Transactions done through International Credit Cards while traveling or staying abroad will not be covered under LRS.
Hence it will not be subject to TCS. The government has not yet given any date as to when credit card expenses will be brought under LRS, but has said that the new TCS rates under LRS will be effective from October 1.
As and when applicable, but what will be the time period for getting TCS refund? Taxpayers can claim ‘20% TCS’ at the time of filing ITR.
