New TCS rules have kicked in: Here's what gets costlier and what remains same
tax collection at source (TCS) rates will impact various financial transactions, including international travel, investments in foreign assets, and educational expenses abroad. To help you navigate this upcoming change, we present a breakdown of the revised TCS regime.
Under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), individuals can remit up to $250,000 in a financial year. Starting October 1, 2023, all overseas outward remittances, except those for medical and educational purposes, exceeding the threshold of Rs 7 lakh in a financial year will incur a 20% TCS.
TCS is not a standalone tax but a tax credit, reflected in Form 26AS. It can be claimed against tax payable when filing income tax returns (ITR) or offset against advance taxes. If you cannot offset it against taxes or other forms, it will be available as a refund after filing ITR.
Here's what gets costlier and what remains same...
Foreign Remittances for Education
How to cut your TCS hit if you invest in foreign assets
For foreign remittances below Rs 7 lakh spent on educational expenses, there will be no TCS under LRS. If the remittance for foreign education exceeds Rs 7 lakh and is obtained through a loan from an approved financial institution, it will attract a TCS rate of 0.5%. Remittances above Rs 7 lakh for educational purposes, not obtained through a loan, will incur a TCS of 5%.
Medical Expenses
Any outward remittance for medical treatment exceeding Rs 7 lakh will be subject to a 5% TCS.
It's important to note that remittances for travel and ancillary expenses related to education and medical treatment will also be subject to TCS at the same rate applicable to education and medical treatment, as per the
