TCS remittance limited hiked from Rs 7 lakh: Check the new limit announced in Budget 2025 The TCS is applicable to the outward foreign remittance made by students for education purposes, travel purposes, or investment in foreign countries. The new limit will help to avoid taxes and face a liquidity crunch
The Finance Minister has hiked the tax collected at source limit from Rs 7 lakh currently to Rs 10 lakh in Budget 2025. Apart from hiking the threshold for TCS on foreign remittances, the government has proposed to remove TCS foreign remittances for education purposes.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Budget with ET
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As per the announcement made in the Budget 2025, "The threshold to collect tax at source (TCS) on remittances under RBI's Liberalized Remittance Scheme (LRS) is proposed to be increased from Rs 7 lakh to Rs 10 lakh. I also propose to remove TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution."
TCS stands for tax collected at source. The relief has come after the Union Budget 2023-23 increased TCS on foreign remittances to 20% from 5% earlier, except in specified cases. The new TCS rates came into effect from October 1, 2023, with a threshold limit. This came after the Finance Ministry received severe criticism from common people and industry experts.
Current TCS Applicability Under Income Tax Rules
As per the current income tax rules, all outward foreign remittances, except for education and medical purposes, attract 20% TCS if the remittance amount is above Rs 7 lakh in a financial year. This includes buying equity shares of a foreign company, making e-commerce purchases from foreign websites, etc. For an overseas tour package, a TCS of 5% is applicable if the amount is below Rs 7 lakh; if the amount exceeds that, a TCS of 20% is applicable.For medical purposes, the TCS of 5% is applicable if the foreign outward remittance amount exceeds Rs 7 lakh in a financial year. In the case of education, the source of funds decides the TCS rate. If the loan is taken from a financial institution covered under Section 80E, then no TCS is applicable for amounts up to Rs 7 lakh. If it is more, then a TCS of 0.5% will be applicable. On the other hand, if an individual funds his/her own education or if the education loan is taken from a financial institution which is not covered under Section 80E, then TCS will be at 5%.
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TCS Applicable on Debit, Forex Card Payments
Individuals must remember that TCS is applicable on payments made via debit cards and forex cards. However, TCS at the rate of 20% will be applicable only if payments exceed Rs 7 lakh in a financial year. Currently, foreign payments made via credit cards are out of the TCS ambit. According to the Finance Ministry’s press release dated June 28, 2023, “To give adequate time to banks and card networks to put in place requisite IT-based solutions, the Government has decided to postpone the implementation of its 16th May 2023 e-gazette notification. This would mean that transactions made through international credit cards while being overseas would not be counted as (LRS (liberalised remittance scheme) and hence would not be subject to TCS. The Press Release dated 19th May 2023 stands superseded.” #sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}This story originally appeared on: India Times - Author:Faqs of Insurances
