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Under the Liberalised Remittance Scheme (LRS), all resident individuals (as defined under FEMA 1999), including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
Under the Liberalised Remittance Scheme (LRS), all resident individuals (as defined under FEMA 1999), including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) for all transactions under LRS.
TCS on foreign remittance under LRS is effective on any remittance transaction under LRS on or after 1st October, 2020.
The tax will be applicable on all remittance(s) that fall under the LRS of RBI.
All remittances more than Rs. 7 lakhs in a financial year done under the LRS will be liable for a 5% TCS except if the remittance is for education paid through a loan obtained from any financial institution, where the TCS rate would be 0.5%.
All remittances more than Rs. 7 lakhs in a financial year done under the LRS will be liable for a 5% TCS except if the remittance is for education paid through a loan obtained from any financial institution, where the TCS rate would be 0.5%.
The exemption from TCS on remittance overseas under LRS for amounts less than Rs. 7 lakh in a financial year will not be applicable, if the amount is being remitted for the purchase of overseas tour program package. Therefore, there is no monetary threshold prescribed for remittance for the purchase of overseas tour program package and bank will collect TCS on the entire amount irrespective of its value.
TCS at 0.5% shall be applicable on the amount exceeding Rs. 7,00,000 in a financial year under LRS, if the amount remitted is obtained out of a loan from a Financial Institution for pursuing education.
TCS at 0.5% shall be applicable on the amount exceeding Rs. 7,00,000 in a financial year under LRS, if the amount remitted is obtained out of a loan from a Financial Institution for pursuing education.
For this purpose, ‘financial institution’ means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf.
E.g. if the total amount remitted under LRS in a financial year is Rs. 8,00,000 for pursuing overseas education, TCS at 0.5% will be applicable on Rs. 1,00,000 (Rs. 8,00,000 – Rs. 7,00,000).
TCS at 5% shall be applicable on remittances exceeding Rs. 7 lakhs in a financial year.
TCS at 5% will be applicable on the total amount remitted and Bank will collect TCS on the entire amount irrespective of its value.
TCS at 5% will be applicable on the total amount remitted and Bank will collect TCS on the entire amount irrespective of its value.
For instance, if the amount remitted is Rs. 2,00,000, TCS at 5% will be applicable on entire Rs. 2,00,000.
All forex transactions under LRS will be included in threshold limit of Rs. 7 lakhs. However, there is no monetary threshold prescribed for remittance for the purchase of overseas tour program package and bank will collect TCS on the entire amount irrespective of its value.
TCS on all forex transactions under LRS shall be applicable from 1st October, 2020. However, for tracking the threshold limit of Rs. 7 lakhs, all forex transactions under LRS made from 1st April, 2020 would be considered.
Yes, TCS will be applied on LRS transactions exceeding Rs. 7 lakhs if foreign exchange facility is availed through FCY Cash withdrawal at Branches / loading Forex cards.
It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) for all transactions under LRS.
No GST will be applicable on the tax collected as TCS. However, GST will be applicable on the currency conversion, remittance service charge and other charges.
The Bank will not collect TCS in case:
The Bank will not collect TCS in case:
Yes, remitter / customer can claim credit for the tax collected by the Bank while filing for their tax returns as TCS is deemed to be a payment of tax on behalf of the person from whom the amount has been collected.
The Bank will not refund TCS collected by it and paid to Government. However, credit for the same shall be available to the remitter/customer and they can claim refund by filing income tax return.
Government of India has introduced a new section 206AB in the Finance Act, 2021 for deduction of TDS at higher rates if an amount is paid or payable to the specified person who did not file his Income Tax return in both the two previous financial year and whose aggregate TDS /TCS in each of the two previous financial years has exceeded Rs.50,000. TCS at a higher rate will be charged to such a specified person starting 1st July 2021
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