New TCS rule apply from October 2023: Under the Liberalized Remittance Scheme (LRS) of RBI, 20% TCS has been applied on the amount spent or invested abroad in excess of the prescribed limit.
New rates of tax collection at source (TCS) on expenditure or investment abroad will be applicable from October 1, 2023. The Finance Ministry had extended the rates applicable from July 1 for 3 months. Actually, under the Liberalized Remittance Scheme (LRS), 20% TCS has been implemented on the amount spent or invested abroad in excess of the prescribed limit.
20% TCS rule will be applicable from 1 October 2023
Under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI), you can send up to $ 250,000 in a financial year. TCS of 20% will be levied on all remittances, except for medical and educational purposes, exceeding the limit of Rs 7 lakh in a financial year, starting from October 1, 2023.
More TCS will have to be paid in these cases
Whether you are going on international travel, investing in foreign stocks, mutual funds or cryptocurrencies, you will have to pay TCS if you spend more than a certain amount in a financial year.
Spending less than Rs 7 lakh will save you from TCS
The Finance Ministry has made it clear in the circular issued on May 19 that if a person spends up to Rs 7 lakh through credit or debit card abroad, then he will not have to pay TCS. Such persons will be out of the scope of Liberalized Remittance Scheme (LRS) of RBI.
How to avoid increased TCS rate if you are going abroad?
After the implementation of the new rule of increased TCS rate, if you book your foreign tour through domestic travel agents or online portals, you will have to bear the expense of a huge amount of TCS. But, if you take tour packages offered by international websites and make payment through international debit and credit cards, there will be no TCS to be paid if the payment is within the limit of Rs 7 lakh.
