Section 206C(1G) :”TCS on Foreign Remittance Through Liberalized Remittance Scheme (LRS):
S.No. | Particulars | If PAN is Available | If PAN is not Available |
1 | LRS – For Education and Medical Treatment | 5% of Remittance Amount in Excess of Rs. 7.00 Lacs during FY | @10% instead of 5% of Remittance Amount in Excess of Rs. 7.00 Lacs during FY |
2 | Remittance related to Studies abroad, Where source of Fund is Educational Loan | 0.5 % of the remittance amount in excess of 7.00 Lacs during FY | @5% instead of 0.5% of Remittance Amount in Excess of Rs. 7.00 Lacs during FY |
3 | LRS – Other than Education and Medical Treatment | Flat 20% of Remittance Amount | Flat 40% of Remittance Amount |
4 | Overseas Tour Program (Payment for Purchase of Tocket, Booking Hotel, etc.) | Flat 20% of Remittance Amount | Flat 40% of Remittance Amount |
LRS Scheme of RBI:
Under LRS Scheme, an Individual person who is resident in India as per FEMA is permitted to remit outside India fund up to US$ 2,50,000 per financial year (April to March) without any approval of RBI for any permitted current account or capital account transactions or both such as opening foreign currency account abroad, purchase of property or making investments abroad, private visit, gift/donation, business trip, medical treatment, studies abroad, going abroad on employment, etc. This scheme is available only to Individuals (including minors) and not to corporates, Partnership firms, LLP, HUF, etc.
Liability to collect TCS:
The authorized dealer who is authorized by RBI under Foreign Exchange Management Act, 1999 (“FEMA”) to deal in foreign currency or foreign security, would be liable to collect such TCS from the buyer who is remitting such amount of foreign exchange outside India under the LRS scheme.
Read Also : Important FAQ’s of TCS on Sale of any Motor Vehicle
Point of liability to collect TCS
From 01.10.2020, any amount or aggregate of the amounts being remitted outside India by a person resident in India under the LRS Scheme of RBI in excess of Rs. 7 Lakh in a F.Y will attract TCS @5%. It is pertinent to note that the Tax shall be collected from 01/10/2020 but threshold limit of 7 lakhs shall be calculated from 01/04/2020.
Overseas Tour Program Package:
means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
Exclusions for the applicability of TCS
The liability to collect TCS under LRS or overseas tour program package will not be applicable in case of below categories of buyer:
Central Government, State Government, an embassy, a High Commission, legation, commission, consulate, and the trade representation of a foreign State.
A local authority as defined in Section 10(20) of the Act.
Any person specified by the Central Government through a notification in the Official Gazette. However, no such person has been notified till date.
A buyer who is liable to deduct tax at source (“TDS”) under any other provision of the Act and has deducted the same
Read Also : TCS on Sale of Goods
Example:1
Case: 1 –
On 10/12/2022 Mr. Santosh wants to transfer 10 lakhs to USA through onlinesolves Ltd.(an authorized dealer) under LRS scheme of RBI.
Solution:
In this case AB Ltd require to collect TCS from Mr.Santosh at the rate of 5%*3,00,000 i.e. 15,000 on 10/12/2022.
Case: 2 –
Suppose in Case-1, Mr. Santosh wants to transfer only 5 lakhs instead of 10 lakhs.
Solution:
In this case TCS NOT applicable as it applies only if amount is more than 7 lakhs.
Case: 3-
Suppose in Case-1, Mr. Santosh not submitted PAN/Aadhar to AB Ltd.
Solution:
In this case TCS applicable at the rate of 10% of 3,00,000 i.e. 30,000
Case: 4
Suppose in Case-1, Mr. Santosh takes an Education loan from IDFC First Bank for his son’s higher education outside India, 10 lakhs remitted through AB Ltd. on 10/12/22.
Solution:
In this case TCS applicable at the rate of 0.5% of 3,00,000 i.e. 1,500.
Case: 5
Suppose in Case-1 Mr. Santosh remitted 5 lakhs through AB Ltd. (dealer) and 5 lakhs through JJ Ltd (dealer).
Solution:
In this case TCS not appliable as dealer not received amount of more than 7 lakhs.
Example: 2
Mr. Devam purchased Singapore tour package from Thomas Cook for *2,50,000 on 16/09/23.
Solution: In this case Thomas cook required to collect TCS @ 20% of 2,50,000 i.e.50,000.
Example: 3
Suppose in example 2 Devam deducted TDS of Thomas Cook u/s 194C
Solution: If TDS deducted under any provisions of IT then TCS not apply u/s 206C(16)
