TCS on overseas remittance for buying assets abroad to be increased from 5% to 20 per cent

During the Budget 2023 speech, the FM has proposed to hike TCS rate for those investing abroad.

TCS, overseas investment, tax, new rule, Budget 2023, Union Budget 2023 India, Budget 2023 India, Budget 2023-24, Nirmala Sitharaman, Finance Minister
TCS rate for overseas remittances proposed to be increased.

Buying US stocks or properties abroad may become more tax complaint. Union Minister of Finance Nirmala Sitharaman while presenting Budget 2023 has proposed to increase the TCS on certain remittances made overseas. TCS is different from TDS and can be taken by the individual as a refund while filing ITR.

For the purpose of any education, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E and for medical treatments abroad, the TCS stands at 0.5% and 5% respectively. However, on foreign tour packages and for other remittances such as buying stocks, properties abroad, the TCS limit has been proposed to be 20% in the Budget 2023.

Importantly, the TCS of 20% on buying global stocks and properties will be 20% without any threshold limit.

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Wright Research, SEBI Registered Investment Advisor,” India hotel is the biggest gainer in the mid and large-cap space as the Union Budget 2023 increases tax collection at source for overseas tour packages. The TCS (tax collection at source) for overseas tour packages has been increased from 5 per cent to 20 per cent for high-cost tour packages above Rs 50 lakh.”
The Liberalized Remittances Scheme (LRS) of RBI allows individuals to send up to 2.5 lakh dollars in a fiscal year, which is equal to around Rs 2 crore. Such remittance could be used to pay for overseas medical or educational costs or even buying properties or stocks on Nasdaq and other global stock exchanges.

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Currently, there is Tax Collection at Source (TCS) of up to 5% on remittances of Rs 7 lakh or more in a fiscal year. If the total foreign exchange facility availed under LRS in a financial year is Rs 10 lakh, which you want to remit abroad, a TCS at 5 per cent will be applicable on Rs 3 lakh. (Rs 10 lakh minus Rs 7 lakh) and tax collected will be Rs 15,000.

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First published on: 01-02-2023 at 17:14 IST