From 1 Oct, 5% tax on foreign fund transfer | Mint
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Business News/ News / India/  From 1 Oct, 5% tax on foreign fund transfer
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From 1 Oct, 5% tax on foreign fund transfer

  • Individuals can remit a maximum of $250,000 abroad every year
  • For education-related foreign remittances funded by loans, though, the tax will be just 0.5% for the amount above ₹7 lakh
  • TCS will not apply if the amount remitted is less than Rs700,000 and is not for buying a tour packagePremium
    TCS will not apply if the amount remitted is less than Rs700,000 and is not for buying a tour package

    Any amount sent abroad to buy foreign tour packages, and every other foreign remittance made above 7 lakh, will attract a tax-collected-at source (TCS) beginning 1 October unless tax is already deducted at source (TDS) on that amount.

    While the tax on foreign tour packages will be 5% for any amount, for other foreign remittances the tax will kick in only for the amount spent above 7 lakh.

    For education-related foreign remittances funded by loans, though, the tax will be just 0.5% for the amount above 7 lakh, considering many Indian students take loans to pursue education abroad.

    Under the Reserve Bank of India’s liberalized remittances scheme, individuals can remit a maximum of $250,000 abroad every year. The provision to collect tax on remittances was introduced in the Finance Act of 2020 subject to riders and notified on 27 March to take effect from 1 October.

    Many financial institutions have communicated the applicability of tax-collected-at source on remittances from October to customers.

    The Union finance ministry has been extending the scope of both tax-deducted at source and tax-collected at source, and encouraging electronic payments in order to have a better idea of transactions in the Indian economy and to be able to match the spending pattern of assessees with their reported taxable income.

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    ABOUT THE AUTHOR
    Gireesh Chandra Prasad
    Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
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    Published: 09 Sep 2020, 10:52 AM IST
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