Tax threshold on overseas remittances hiked to Rs 10 lakh from Rs 7 lakh; for education, TCS removed if funded by loan

Under the Liberalised Remittance Scheme, nonmigratory individuals, including minors, tin freely remit up to US$ 2,50,000 per fiscal twelvemonth for permissible existent oregon superior relationship transactions. These transactions see education, aesculapian attraction abroad, acquisition of property, and investments successful overseas stocks.

According to Poonam Upadhyay, Director, Crisil Ratings, the projected hike successful taxation collected astatine root threshold connected remittances nether the LRS from Rs 7 lakh to Rs 10 lakh should payment the question and overseas speech sectors. It volition supply tailwinds for the outbound tourism and hose sector. Students and individuals seeking aesculapian attraction volition besides benefit.

Manoj Purohit, Partner, Tax and Regulatory Services, BDO India, said rationalisation of levy of TCS connected LRS by expanding the bounds would summation the basal for exemption and summation compliance. Also, exempting the TCS connected payments made for acquisition purposes via specified fiscal institutions volition easiness the load connected students readying to survey overseas with minimal taxation compliance processes.

Outward remittances nether LRS were $ 31.735 cardinal during the twelvemonth ended March 2024. Travel has emerged arsenic the superior root of remittance outflow from India, accounting for implicit 50 per cent of full outflows astatine $ 17 cardinal from conscionable 1.5 per cent stock successful FY14. Student remittances were $ 3.47 cardinal successful FY24.

TCS is not an further taxation liability arsenic radical tin assertion a refund portion filing income taxation returns. As per the TCS rates nether LRS projected successful the 2023-24 Budget, overseas circuit bundle attracted TCS of 20 per cent from October 1, compared to 5 per cent. However, TCS volition not beryllium levied connected recognition paper spending abroad. On International spends done recognition cards, HDFC Bank said successful a connection to relationship holders, “the classification of usage of planetary recognition paper portion being overseas, arsenic LRS is postponed.

Therefore, nary TCS shall beryllium applicable connected expenditure done planetary recognition paper portion being overseas till further order.”

As of now, for acquisition wherever the root of money is simply a loan, determination is nary TCS for little than Rs 7 lakh per idiosyncratic per annum; for amounts adjacent to oregon much than Rs 7 lakh, the applicable TCS was astatine 0.5 per cent. For acquisition purposes wherever the root is self-funding, for amounts little than Rs 7 lakh nary TCS volition beryllium levied, but for amounts of Rs 7 lakh and above, TCS complaint was 5 per cent.

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