Did you hear of the latest updates in tax collected at source or the TCS on remit money abroad?
The current hot news in the Indian forex market is the recent notification made by the ‘Finance Act, 2020’, which is the introduction of tax collected at source in forex purchases. It has created a lot of chaos and confusion among people as it is a newer term for many, and the majority are unaware of its executions. If you are looking around to know more about TCS, you are in the right place…
What is TCS?
It is nothing but a 5% tax imposed while you make any forex purchase.
10 points to note on TCS while making a swift transfer
1. The Finance Act of 2020 has notified the application of Tax Collected at Source on March 27th, 2020 with effect from October 1st, 2020.
2. TCS is applicable on all overseas transactions coming under the LRS scheme
3. Any amount sent abroad in order to purchase foreign tour packages and other foreign remittance above 7 Lakhs falls under the TCS.
4. The standard rate of tax imposed at the source is 5%
5. By imposing Tax Collected at Source while remitting money abroad, you will have a hike of 5% for your foreign tour packages and other related expenditures in the form of tax.
6. TCS will reflect on various overseas travel expenditures including, travel expenses, hotel stay payments, boarding or lodging fee, entry fee to historical monuments, museums, etc, dining expenses, and much more
7. Those who have a PAN/Aadhar card has the privilege to avail of a deduction in the tax imposed while making forex payments
8. You can get up to a 0.5% rate, less on the loan amount exceeding Rs.7 Lakhs that is taken for overseas education from any authorized financial service provider.
9. If you don’t have a PAN/Aadhar card, you must pay more compared to people holding the same
10. Without PAN/Aadhar card, you have to pay approximately a 10% more tax in Tax Collected at Source
If you gather accurate info about TCS/ Tax Collected at Source, it’s gonna be an easy affair to deal with and if not, vice versa. So, keep the ten points listed above before you enter into the world of the forex market for an easy and hassle-free remittance.