The central government has made a new rule related to collecting taxes on sending money abroad. These rules will come into effect from 1 October 2020. In such a situation, if you send money to your child studying abroad or help a relative financially, then you will have to pay an additional 5% tax collected at source (TCS) on the amount. According to the Finance Act 2020, according to the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI), the person sending money abroad will have to pay TCS. Let us know that under LRS you can send up to 2.5 lakh dollars annually, on which there is no tax. TCS will have to be given to bring it under the tax net.
Education and tour packages are given discounts
The government has given some exemption in this case, under which this tax will not be applicable on all the money sent abroad. TCS will not be charged if you send Rs 7,00,000 or less for the education of children. If education loan is more than Rs 7,00,000, then 0.5% TCS will be levied. TCS will not be applicable to the amount sent abroad for any tour package. Explain that TCS will not be applicable for any amount of Rs 7,00,000 or less sent abroad for any work, that is, TCS will be applicable if the amount is more than this. However, in the case of tour packages, a higher amount is also exempted.
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That is why the TCS rule had
to be made, on the need to bring this rule to the government, Sharad Kohli, the founder and chairman of KCC Group, told that TDS is deducted on many types of payments abroad. At the same time, money sent to pay gifts, treatment, investment in property, the help of relatives, hospital, was not covered under TDS. All these are exempted from TDS under RBI’s LRS. Actually, any Indian can send up to 2.5 lakh dollars annually under RBI’s LRS. To bring this money into the tax radar, a rule has been made for taking TCS. Many types of discounts have been made in this. Everyone except them will have to pay 5 percent TCS.
this is the big difference between TDS and TCS
If a person sends Rs 100 abroad and 5% TDS is applied to it, then the recipient will get only Rs 95. At the same time, under TCS rule, if one person sends 100 rupees to another person abroad then the recipient will get full 100 rupees. The sender will be charged 5 rupees separately, which will be credited in his PAN. It is important to know here that these 5% TCS are being credited from you in your PAN, which you will get later. TDS is applicable to all taxpayers in the country. In such a situation, a rule has been made that if the TDS has already been applied to the taxpayers sending them abroad, then the provisions related to TCS will not apply to them.
