New TCS from 1st October 2023 for various foreign remittances:

 

1.     Educational Usage: Concerning sending money abroad for educational purposes, no Tax Collection at Source (TCS) is applied for amounts below Rs 7 lakhs. However, if the educational remittance exceeds Rs 7 lakhs, a modest TCS rate of 0.5% is levied. It's important to note that if the educational remittance is not funded by a loan, a slightly higher TCS rate of 5% is imposed. This ensures that significant educational expenses exceeding Rs 7 lakhs incur a reasonable TCS.

 

2.     Medical Needs: Remittances designated for medical purposes are subjected to a 5% TCS if the amount surpasses Rs 7 lakhs. The Ministry of Finance has clarified that the TCS rate remains consistent for all travel and ancillary expenses associated with medical and educational treatments. Consequently, expenses like hostel fees for a child studying abroad can also be categorized as funds sent for medical purposes.

 

3.     Foreign Travel: Presently, foreign tour packages are subject to a 5% TCS without a specified threshold limit. This applies to the complete cost of the tour package. However, starting from October 1, for purchases of overseas tour packages up to Rs 7 lakhs in a financial year, a TCS of 5% will continue to apply. If the total cost of the tour package exceeds Rs 7 lakhs, a higher TCS rate of 20% will be applicable. This notable increase in TCS is aimed at regulating outward overseas remittances, encompassing various expenses like bank account transfers, forex card loading, foreign exchange, travel costs, and business trips.

 

4.     Investments: Regarding investments made abroad, such as buying stocks, mutual funds, and cryptocurrencies, a TCS rate of 20% is applicable when the investment amount exceeds Rs 7 lakhs. However, if the investment falls below this threshold, no TCS is imposed. This exemption promotes smaller-scale investments. It's vital to comprehend that investments in domestic mutual funds with exposure to foreign stocks are not considered remittance under the Liberalised Remittance Scheme (LRS) and thus are not subject to TCS.

 

5.     Credit Card Transactions: Credit card transactions are outside the scope of the Liberalised Remittance Scheme (LRS) and, therefore, not subject to TCS. However, it's essential to differentiate between payment methods: debit cards and forex cards do fall under LRS regulations. Whether TCS is charged on these cards depends on the specific purpose of the transaction.