How to cut your TCS hit if you invest in foreign assets

economictimes.indiatimes.com:

tax regulations is set to impact Indian residents investing in foreign assets. A Tax Collected at Source (TCS) of 20% will be levied on foreign remittances exceeding Rs 7 lakh in a financial year, with some exceptions. This alteration in the tax regime will influence those who invest in international stocks or plan to acquire real estate abroad.

Presently, there is no TCS on foreign remittances up to Rs 7 lakh per year. However, if investors send more than Rs 7 lakh for investments in foreign securities under the Liberalised Remittance Scheme (LRS), a TCS of 5% is applicable.

So, what changes are expected this month? The Budget 2023 has raised the TCS rate on foreign remittances of over Rs 7 lakh through the LRS to 20%. This higher rate will come into effect on October 1, 2023.
Here's a breakdown of the TCS and its implications for investors:

Imagine you are an Indian resident directly investing in US stocks. You have already invested Rs 7 lakh in the relevant financial year and plan to add Rs 1 lakh more to your overseas broking account. If you remit Rs 1 lakh to the broking account through a bank, Rs 20,000 will be deducted as TCS by the bank, leaving only Rs 80,000 in your broking account.

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To purchase shares worth Rs 1 lakh (after reaching the Rs 7 lakh limit), you'll need to deposit Rs 1.25 lakh. This ensures that your brokerage account will have Rs 1 lakh, as 20% (equivalent to Rs 25,000) will be deducted as TCS by the bank.

It's important to note that TCS is not an additional tax burden. You can offset the Rs 20,000 deducted as TCS against your tax liability when filing your income tax return (ITR). If you have no