Finance Ministry is going to come out with a detailed clarification regarding TCS (Tax Collected at Sources) on Liberalised Remittance Scheme (LRS), a senior Government official said on Friday.
TCS is a mechanism to track expenditure from taxation point of view. It is paid by buyers over and above the price to sellers who, in turn, deposit with the Government. New norms for TCS are coming into effect from July 1. However, trade and businesses have a lot of queries.
"We are certainly going to come up with some clarifications and FAQs on that which will clarify the position beyond any reasonable doubt on what and how and in what manner TCS is to be collected and to what extent is the threshold available on which it is not to be collected," Raman Chopra, Joint Secretary in the Department of Revenue, said while responding to members of industry chamber Confederation of Indian Industries (CII).
LRS allows resident individuals (including minors) to remit funds outside India up to $250,000 per financial year for any permissible capital/current account transactions. It may also include remittances within India for example gifts/loans to NRIs or investment through GIFTCity units.
The Budget 2023 made changes such as increase in TCS rate from 5 per cent to 20 per cent for remittances other than for education/medical purposes, removal of threshold of ₹7 lakh for remittances other than for education/medical purposes and extended TCS to LRS remittances within India.
On May 16, a notification in the Foreign Exchange Management (Current Account Transactions) Rules brought usage of international credit cards (ICC) towards meeting expenses on a visit outside India is brought under LRS (earlier only debit cards were included). Later the Finance Ministry clarified that ICC/international debit card transactions up to ₹7 lakh will be excluded from LRS.
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