Any amount sent abroad to purchase organized trips abroad, and any other foreign remittances made above ₹7 lakh, will attract a tax collected at source (TCS) from October 1, unless the tax is already deducted at source (TDS) on this amount.
While the overseas tour package tax will be 5% for any amount, for other overseas money transfers the tax will only come into effect for the amount spent above. ₹7 lakh.
For foreign education-related remittances financed by cash loans, however, the tax will only be 0.5% for the above amount. ₹7 lakh, since many Indian students take out loans to continue their studies abroad.
Under the Reserve Bank of India’s liberalized remittance program, individuals can send a maximum of $ 250,000 abroad each year. The provision for the collection of the tax on remittances was introduced in the 2020 finance law subject to the amendments and notified on March 27 with effect from October 1.
Many financial institutions have communicated on the applicability of the withholding tax on October remittances to customers.
The Union Ministry of Finance has broadened the scope of withholding tax and withholding taxes, and has encouraged electronic payments in order to get a better picture of transactions in the Indian economy and to d ” be able to match the expenditure pattern of people assessed with their declared taxable income.