New Delhi [India]June 29 (ANI): The proposed increase in tax collected at source rates under the Liberalized Remittance Scheme, which was to come into effect from July 1, will now come into effect from October 1, 2023.
Till September 30, 2023, the previous rates (prior to revision by the Finance Act 2023) would continue to be applicable, an official release from the Finance Ministry said on Wednesday.
The Finance Ministry said that the decision to postpone the date of implementation was considered after receiving comments and suggestions from various quarters.
Some changes were announced in the budget this year in the system of Tax Collection at Source (TCS) on payments under the Liberalized Remittance Scheme (LRS) and foreign tour program packages. It was also announced earlier this year that credit card payments would be brought under the LRS.
“Vide the Finance Act 2023, amendments were made to sub-section (1G) of section 206C of the Act. These amendments, inter alia, increased the rate of TCS from 5% to 20% for remittances under LRS as well as purchase of foreign tour program packages and a limit of Rs 7 lakh for triggering TCS on LRS. removed.
However, the changes did not apply when the remittance was for an education or medical purpose.
For purchase of foreign tour program packages, TCS will continue to apply at the rate of 5 per cent for the first Rs 7 lakh per person per annum; The 20 per cent rate will be applicable only on expenditure above that limit.
Here is a table detailing the proposed changes in TCS for LRS:
A fresh circular and frequently asked questions (FAQs) will be issued to clarify various practical issues in implementing this provision, the release said.
First, the finance ministry had said the changes were necessary as it had come to its notice where the LRS payment was “disproportionately high” in comparison to the declared income of some people.
Under the Liberalized Remittance Scheme, all resident individuals including minors are permitted to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
The scheme was launched on 4 February 2004 with a limit of US$25,000. The LRS limit has been revised in phases in line with the prevailing macro and micro economic conditions. There is no restriction on the frequency of remittance under LRS. (ANI)
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