The Ministry of Finance on Wednesday extended the deadline to apply the proposed changes in Tax Collection at Source (TCS) rates from October 1.
“No change in rate of TCS for all purposes under Liberalised Remittance Scheme (LRS) and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs 7 lakh per individual per annum” the press release said.
Centre has given more time for implementation of revised TCS rates and for inclusion of credit card payments in LRS.
“Till 30th September, 2023, earlier rates (prior to amendment by the Finance Act 2023) shall continue to apply,” the ministry said.
Earlier, in Budget 2023, certain changes were announced to the system of (TCS) on payments under the LRS and on overseas tour program packages.
These were to take effect from July 1. It was also announced in March that credit card payments would be brought under the LRS.
The Centre has announced these changes in response to comment and suggestions it received.
“In response to the comments and suggestions it has been decided to make suitable changes. Firstly, it has been decided that there will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum. It has also been decided to give more time for the implementation of the revised TCS rates and for inclusion of credit card payments in LRS.”
The Centre has decided to give adequate time to Banks and Card networks to put in place requisite IT based solutions. It has also been decided to postpone the implementation of its May 16 2023 e-gazette notification.
“This would mean that transactions through International Credit Cards while being overseas would not be counted as LRS and hence would not be subject to TCS. The Press Release dated 19th May 2023 stands superseded,” said the statement.
Secondly, the threshold of Rs 7 Lakh per financial year per individual in clause (i) of sub-section (1G) of section 206C shall be restored for TCS on all categories of LRS payments, through all modes of payment, regardless of the purpose: Thus, for first Rs 7 Lakh remittance under LRS there shall be no TCS. Beyond this Rs 7 Lakh threshold, TCS shall be
a) 0.5 per cent (if remittance for education is financed by education loan);
b) 5 per cent (in case of remittance for education/medical treatment);
c) 20 per cent for others.
For purchase of overseas tour program package under Clause (ii) of Sub-section (1G), the TCS shall continue to apply at the rate of 5 per cent for the first Rs 7 lakhs per individual per annum; the 20 per cent rate will only apply for expenditure above this limit.