The new tax started on the transaction of money – know who and how it will be applicable

ITR Filing 2022

Tax Collected at Source (TCS) Latest News-From October 1, a new tax rule related to TCS (Tax Collected at Source) has come into force. The Income Tax Department has decided to extend the scope of TCS under section 206C (1G) and also apply it to the Liberalized Remittance Scheme (LRS).

The Central Government (Government of India) has made a new rule related to collecting taxes on sending money abroad. This rule has 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-ax Collected at Source).

Know about the new tax TCS (What is Tax Collected at Source) –

According to the Finance Act 2020, the person sending money abroad under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI) Must pay TCS. Explain 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.

The Income Tax Department has decided to extend the scope of TCS under section 206C (1G) and also apply it to the Liberalized Remittance Scheme (LRS). Remittance means money sent out of the country. Remittances can be either in the form of expenses (travel, educational expenses etc.) or in the form of investments. TCS will apply if a remittance of 7 lakh rupees or more is sent by a customer in a financial year from October 1, 2020. The foundation of this new rule has been laid through the Finance Act 2020. Now you have to know the LRS scheme of RBI. Because this scheme here allows to send money abroad. Let’s know about it …

According to the rule, how much money can be sent abroad 
LRS is the scheme of RBI This scheme allows capital account transactions up to $ 2.50 lakh (about Rs. 1.50 crore) within a financial year such as purchase of property abroad, investment, loan extension to NRIs etc. Apart from this, it also allows for current account transactions up to $ 2.50 lakh in a financial year for private / employment visits, business trips, gifts, donations, medical treatment, care of close relatives, etc. Wire transfer is also included in this scheme for the purchase of goods through credit cards on international e-commerce websites. Now we know why the government took such a step?

Read This Also: What is the faceless e-assessment service of income tax?

The government had to make TCS rules 

On the need to bring these rules to the government, Sharad Kohli, 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, 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 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. Let us know which things are excluded from it.

Who will get exemption from the new tax TCS

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, 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 to 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.

Will TCA be charged for sending money to a child studying abroad?
Sharad Kohli says that even sending money to children studying abroad will attract 5% TCS. Education loans will attract TCS at the rate of 0.50 percent.

You will get the amount deducted as TCS later, know how

here it is important to know that these 5 percent TCS are being credited from you in your PAN, which will be received later.

What is the 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 the full 100 rupees. The sender will be charged 5 rupees separately, which will be credited in his PAN. TDS is applicable to all taxpayers in the country. In such a case, a rule has been made that if the TDS has already been applied to the taxpayers who send abroad, then the provisions related to TCS will not apply to them.