TCS at 20% under Income tax Act on sending money outside India under LRS. Applicable on non-resident?
CBDT has amended the provision of Section 206C(1G) to charge 20% TCS on remittance made outside by a person making remittance under LRS.
Thus, various rate of TCS under Income tax for making remittance under LRS are as under:
| Purpose of remittance | Rate of TCS | Limit if any |
| Remittance for education financed by education loan as prescribed under 80E | 0.5% | Above Rs.7 lakh for each FY |
| Payment for Education and medical other than above | 5% | Above Rs.7 lakh for each FY |
| Any other purpose under LRS | 20%* | No Limit |
*Before 01.10.2023, TCS rate on such transaction was 5%.
Thus, after 01.10.2023, any remittance made outside India for any purpose i.e. maintenance of family or investment etc. 20% TCS shall be applicable.
Please note that the TCS is applicable only on remittance under LRS, hence any payment for non LRS matters i.e. payment for business purpose should not be covered under the above TCS.
Let’s understand what is covered under LRS:
What is the Liberalised Remittance Scheme (LRS) of USD 2,50,000?
Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
What are the various transactions which are covered under LRS?
Ans. Various transactions covered under LRS are:
Private visits to any country (except Nepal and Bhutan)
Gift or donation
Going abroad for employment
Emigration
Maintenance of close relatives abroad
Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up
Expenses in connection with medical treatment abroad
Studies abroad
Any other current account transaction which is not covered under the definition of current account in FEMA 1999.
Will TCS under LRS be applicable on non-resident?
Ans. As mentioned in first query above since LRS is only available to resident Individual hence such TCS should not be applicable to non-resident.
Thus, while making any payment outside India no TCS shall be collected on a payment by non-resident provided they have informed the bank that they are non-resident.
Guidance on above article for Indian Income Tax by:
Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments before Income Tax authority, Tax Audit, International Taxation, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo
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