What is the TCS on foreign remittances?

What is the TCS on foreign remittances?

An abroad remittance is on your way? Or are you a frequent remitter abroad? Then you might have heard about TCS or otherwise known as – Tax Collected at Source. TCS has become unavoidable in the present day remittances abroad. So, everyone who is going to remit money abroad has to be clear about it for a smoother and hassle free money transfer from India. This article is mainly aimed to provide you with everything you need to know about TCS in detail. Scroll down and know more about it now!

What is TCS?

TCS is actually the acronym for Tax Collected at Source. This is a kind of an Income Tax, which is predetermined and the same will be collected from the buyer by the seller of the product and deposit the same with the government. TCS is applicable on all international money transfers coming under the LRS scheme. The standard rate of tax collected at the source is 5%.

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    Are there any exemptions in the application of TCS?

    Every overseas remittance under 7 lakh is not subject to TCS. Likewise, payments for overseas education originating from an education loan from a financial institution in India are subject to a lower 0.5% TCS. If you book your international trip by yourself including air tickets, hotels etc rather than depending on a travel service provider, you will not need to pay TCS. Also, It is not applicable if the remitter is subject to Tax Deducted at Source (TDS) under the Income Tax Act, 1961. GST will not be applied to the TCS amount. The sender can also claim credit for the tax amount collected by the Bank while filing their tax returns.

    Who will collect the tax?

    Usually, the bank – Authorized Dealer of the given foreign exchange –  will collect the TCS and transfer it to the Government. In the case of foreign travel, the travel agent or the operator is supposed to collect the same.

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