Govt defers implementation of TCS rule by 3 months
The government has brought in several changes to the tax collected at source (TCS) system on overseas remittances following feedback.
The government on Wednesday said overseas spending using international credit cards will not be included under the Liberalised Remittance Scheme (LRS) and hence, would not attract TCS.
Also, the implementation of a higher rate of tax collected at source (TCS) of 20% on overseas remittances under LRS, like tour expenses, has been deferred by three months and will come into effect from October 1.
However, Credit card spending overseas will not attract TCS from October 1.
The higher TCS rate will be applicable only when the LRS payments exceed the threshold of Rs 7 lakh.
The government, in Finance Bill 2023, had increased the rate of TCS from 5% to 20% for remittance under LRS as well as for the purchase of overseas tour programme packages and removed the threshold of Rs 7 lakh for triggering TCS on LRS.
These two changes were not applicable when the remittance is for education or medical purpose. These amendments were to take effect from July 1, 2023.
"In response to the comments and suggestions, it has been decided to make suitable changes. Firstly, it has been decided that there will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of the mode of payment, for amounts up to Rs 7 lakh per individual per annum.
"It has also been decided to give more time for the implementation of the revised TCS rates and for inclusion of credit card payments in LRS," the finance ministry said.
For the purchase of an overseas tour programme package, the TCS shall continue to apply at the rate of 5% for the first Rs 7 lakh per individual per annum; the 20% rate will only apply for expenditure above this limit, the ministry added.
Edited by Kanishk Singh