What are the new TCS rates for foreign remittances applicable from October 1, 2023

economictimes.indiatimes.com:

The rules for tax collection at source (TCS), announced in this year’s Budget, were revised recently. ET Wealth answers all the questions you wanted to ask.What did the Budget propose regarding TCS under liberalised remittance scheme (LRS)? The government decided to expand the scope of TCS on payments under LRS through Finance Act 2023, by amending sub-Section (1G) of Section 206C of the Income-tax Act, 1961, on: (i) Foreign remittance through LRS.

(ii) Sale of overseas tour program packages. These amendments hiked the TCS rate from 5% to 20% for remittance under LRS, as well as for purchase of overseas tour program packages.

These also removed the threshold of Rs.7 lakh per person, per annum, for triggering TCS on LRS. The amendments were to be enforced from 1 July 2023.What changes were effected in March/May 2023? In March this year, the government decided to bring international credit cards under the purview of LRS and notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, via an egazette notification on 16 May 2023.

This meant that any overseas transactions through international credit cards would amount to foreign remittance under LRS and would be subject to TCS. What changes were made on 28 June 2023? For changes under the Finance Act 2023, it was decided to remove the TCS for all foreign remittances below Rs.7 lakh in a year, except for overseas tour program packages, which would continue to incur 5% TCS. This is valid for all modes of payment regardless of the purpose.

For remittances over Rs.7 lakh, the rates would differ depending on the transaction category (see table). For international credit cards, it has been decided to keep any overseas transactions through such