Starting from October 1, 2023, there will be changes in the Tax Collection at Source (TCS) rates that will impact various financial transactions, including foreign travel, investments in foreign assets, and education expenses abroad. Here’s a breakdown of the new TCS system:
20% TCS Rule Starting October 1, 2023
From the beginning of October 2023, a 20% TCS rule will come into effect.
TCS on Foreign Remittances
Under the Reserve Bank of India’s (RBI) Liberalized Remittance Scheme (LRS), you can send up to $250,000 abroad in a financial year.
However, starting October 1, 2023, a 20% TCS will be applicable on foreign remittances exceeding Rs 7 lakh within a financial year.
TCS for Foreign Education Expenses
For remittances related to foreign education under LRS, no TCS will be levied if the amount is less than Rs 7 lakh.
However, if the remittance exceeds Rs 7 lakh and is received from an approved financial institution, a 0.5% TCS will be applied.
New TCS Rates for Medical Expenses
Effective October 1, 2023, a 5% TCS will be applicable on outbound remittances exceeding Rs 7 lakh for medical treatment abroad.
TCS on Foreign Travel Packages
The new TCS rates for foreign travel packages will also be enforced from October 1, 2023.
A 5% TCS will be imposed on packages costing up to Rs 7 lakh, while a 20% TCS will be applicable on packages exceeding Rs 7 lakh.
