New TCS rule will increase trouble, expenses of children studying abroad will increase

TCS New Rule: Getting foreign currency for spending abroad will now be expensive. Under certain conditions, now Tax Collected at Source (TCS) has been increased on sending money abroad. Let us tell you how it will affect you…

TCS New Rule: If your child is studying abroad, then this news can be useful for you. We are saying this because getting foreign currency for spending abroad will now become expensive. Under the Liberalized Remittance Scheme (LRS), the Tax Collected at Source (TCS) has been increased in the Union Budget 2023 on the transactions for which foreign exchange is allowed. Through LRS, any resident individual can send money outside India for certain capital or current account transactions. For this, RBI allows it under FEMA. This includes opening bank accounts abroad, real estate or other types of investments, travel, immigration, treatment of any disease, etc. Right now there is a limit of $ 2,50,000 per person under LRS.

In this episode, sending money to students studying abroad can also be expensive. This rule will be applicable from 1 July 2023. Let us tell you, the government has increased the rate of TCS on foreign tour packages from 5% to 20%. 20% TCS is also applicable on those things where there is a transaction of more than Rs 7 lakh. This transaction will be applicable on foreign trips, investment abroad, sending money abroad except for education and medical purposes. These will be effective from July 1, 2023.

Understand how it will affect you

Suppose a person named Sumit has just bought an international tour package of Rs. 1 lakh, then the tour operator will collect TCS of Rs. 5000 on it. After the implementation of the provision of Union Budget 2023, this amount will increase to Rs 20,000.

TCS will have to be mentioned in income tax filing

TCS is the payment of tax, any person from whom TCS is collected is entitled to claim credit of income tax under section 206C (1G) on TCS given to forex trader or tour operator at the time of income tax filing. For this, you must take TCS certificate (Form 27D) from the tour operator / forex dealer. Which you can use as a supporting document at the time of tax filing.

According to the current rule, if a person goes abroad, then it is necessary for him to mention the passport number in the income tax return. Apart from this, if a person spends more than Rs 2 lakh while traveling abroad, then it is necessary for him to file income tax return.