TCS stands for Tax Collected at Source. This is different from TDS. TDS is levied on your income, while TCS is levied on your expenses. Many types of expenses come under its purview. Changes in TCS rules were announced a few months ago.
If you are going abroad for studies or travel next month, then it is important for you to know about the new rules of TCS . The new rules of TSS were announced a few months ago. But, these are going to come into effect from October 1, 2013.
This means that from next month, new TCS rules will be applicable on foreign travel, investment in foreign shares and mutual funds and your investment in cryptocurrency. However, TCS rules will be applicable only on expenditure above a limit. Let us try to know about this in detail.
Permission to send 2.5 lakh dollars under LRS
Currently a person can send 2.5 lakh dollars abroad in a financial year. This is allowed under the Liberalized Remittance Scheme (LRS) of RBI. From October 1, 20 percent TCS will have to be paid on sending amounts of more than Rs 7 lakh in a financial year for any purpose other than medical and educational purposes. If you send Rs 7 lakh or less in a financial year then this rule will not apply.
If you take an educational loan for foreign study and send more than Rs 7 lakh in a financial year, then you will have to pay TCS of 0.5 percent. The thing to keep in mind here is that the loan should be taken from a bank or financial institution. If you send more than Rs 7 lakh for foreign study without loan, then 5 percent TCS will be charged on it.
TCS will also be applicable on sending money for treatment abroad
Many people get themselves or their family members treated abroad. This costs a lot of money. According to the new TCS rules, from next month, if you send more than Rs 7 lakh abroad for treatment in a financial year, then 5 percent TCS will be charged on it. TCS stands for Tax Collected at Source. This is different from TDS. TDS is levied on your income, while TCS is levied on your expenses. Many types of expenses come under its purview.
Government did not relax the rules of foreign tour packages
The government had earlier made changes in the TCS rules and later amended them. But, TCS rules on foreign tour packages did not change. From October 1, 2023, if you buy a foreign tour package worth more than Rs 7 lakh in a financial year, you will have to pay 20 percent TCS. If the price of your tour package is less than Rs 7 lakh in a financial year, then you will have to pay 5 percent TCS on it.
TCS will also be levied on investment abroad
If you invest more than Rs 7 lakh abroad from next month, you will have to pay 20 percent TCS on it. This means that if you spend more than Rs 7 lakh in a financial year on buying foreign shares, mutual funds, cryptocurrencies and property, you will have to pay 20 percent TCS.
Credit card expenses outside the scope of LRS
You have to keep in mind that payment made through credit card does not come under the purview of LRS. Therefore, TCS will not be levied on expenses incurred through credit cards. But payments made through debit cards and forex cards come under the purview of LRS. A limit of Rs 7 lakh per financial year also applies to the expenditure incurred due to this. Therefore, if you spend more than Rs 7 lakh in a financial year through debit card and forex card on or after October 1, 2023, then you will have to pay 20 percent TCS.
