TCS W.E.F 01.10.2023.

 

Note on Amendment to TCS Provision vide Circular No 10/2023 dated 30-Jun-2023

The Central Board of Direct Taxes(“CBDT”) has issued Circular No. 10/2023 dated 30-Jun-2023 in order to remove difficulty in implementation of changes relating to Tax Collection at Source (TCS) on Liberalized Remittance Scheme (“LRS”) and on purchase of overseas tour program package(“OTPP”) has provided the following clarification and relief:

1.    In the case of the Overseas Tour Program package, the TCS rate would be 5% up to Rupees 7 lakhs and post which it will be 20%.

2.    In case of any LRS remittances abroad, there will be no TCS up to 7 Lakhs post which applicable TCS rate would be 20%.

3.    International Credit card payments are outside the purview of LRS payments until further notification.

4.    The Change in TCS rate would be effective from October 1^st, 2023.

5.    The existing TCS rates shall prevail till September 30^th, 2023. (for rates refer the table at the end).

Further Clarification is provided in relation to the RBI Purpose code to be used, if the remittance is for Education/Medical Treatment:

1.    In case of remittance for the purpose of education the purpose code to be used is

·       S0305 – Travel for Education(Includes Fees & hostel Expenses)

·       S1107 – for payment of fees for correspondence courses.

2.    In case of remittance for the purpose of medical treatment the purpose code to be used is

·       S0304 – Travel for Medical Treatment abroad (includes medical services, other healthcare, food, accommodation and local transport transactions.)

·       S1108 – For payment of health services rendered remotely or onsite (that is no travel by service recipient is involved). It includes services from hospitals, doctors, nurses, paramedical and similar services, etc.

It is also clarified as to what constitutes OTPP. To qualify as an OTPP, the package should include at least 2 of the following:

·       International travel ticket,

·       Hotel accommodation (with or without food)/boarding/lodging,

·       Any other expenditure of similar nature or in relation thereto.

Therefore, it is clarified that purchase of only international ticket or only hotel accommodation is not OTPP, outside the purview of TCS.

Also Clarification has been provided that payment through forex card falls within the purview of LRS.

 

 

 

In view of the above clarification, the levy of TCS till September 30^th , 2023 and thereafter is tabulated below for easy reference:

Nature of payment	Amount of Payment	TCS rate till 30-Sep-2023	TCS rate from 01-Oct-2023
LRS for Education financed by loan	Up to Rs. 7 Lakhs	0.00%	0.00%
	Above Rs. 7 Lakhs	0.5%	0.5%
LRS for Medical treatment/education(other than financed by loan)	Up to Rs. 7 Lakhs	0.00%	0.00%
	Above Rs. 7 Lakhs	5.00%	5.00%
LRS for other purposes	Upto Rs. 7 Lakhs	0.00%	0.00%
	Above Rs. 7 Lakhs	5.00%	20.00%
Purchase of Overseas tour program package	Up to Rs. 7 Lakhs	5.00%	5.00%
	Above Rs. 7 Lakhs	5.00%	20.00%