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Annual Forex Spends Up To ₹7 Lakh Exempted From TCS

Annual Forex Spends Up To ₹7 Lakh Exempted From TCS:

India will not impose a 20% tax on spending of up to 7 lakh rupees through international debit and credit cards in a financial year to eliminate any procedural uncertainties.

  • This decision comes in response to concerns raised regarding the application of Tax Collection at Source (TCS) to small transactions under the Liberalised Remittance Scheme (LRS) from July 1, 2023.
  • It clarified that expenditures up to ₹7 lakh per year would neither fall under the LRS nor be subject to TCS.
  • To facilitate this exemption, the necessary changes to the Foreign Exchange Management 2000 would be separately issued.
  • Additionally, the ministry emphasised that the existing beneficial TCS treatment for education and health payments would continue, with a TCS rate of 5% for such payments up to ₹7 lakh per year.
  • Also, the Reserve Bank of India recently introduced a new provision under the LRS, allowing individuals to make forex remittances of up to USD 2.5 lakh annually.