International transactions have become an integral part of our lives, whether for education, travel, medical treatment, or investing abroad. However, when sending money overseas, understanding the Tax Collected at Source (TCS) regulations on foreign remittances is crucial.
In this blog, we break down the latest TCS rules, applicable rates, exemptions, and their impact on individuals making foreign transactions.
What is TCS on Foreign Remittance?
TCS is a tax collected by the Indian government on specific transactions, including foreign remittances. This tax ensures that high-value foreign exchanges are tracked and taxed accordingly under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI).
Key TCS Rates for Foreign Remittances
The applicable TCS rates depend on the nature and amount of remittance. Below is a detailed breakdown of the latest rates:
| Type of Foreign Remittance | TCS Rate (Up to ₹ 10 Lakh) | TCS Rate (Above ₹ 10 Lakh) |
| Education (With Loan) | 0% | 0.5% |
| Education (Without Loan) | 0% | 5% |
| Medical Treatment | 0% | 5% |
| Travel, Investment, or Others | 0% | 20% |
To understand how TCS applies, consider the following example:
- If you send ₹ 15 lakh for overseas education (without a loan), the first ₹ 10 lakh is exempt, while TCS is charged at 5% on the remaining ₹ 5 lakh.
- TCS = ₹ 5,00,000 x 5% = ₹ 25,000
- If you invest ₹ 18 lakh in foreign assets, the first ₹ 10 lakh is exempt, but 20% TCS applies on the remaining ₹ 8 lakh.
- TCS = ₹ 8,00,000 x 20% = ₹ 1,60,000
Exemptions and Refunds
- TCS Refund: Since TCS is a tax collected in advance, you can claim a refund while filing your Income Tax Return (ITR) if your total tax liability is lower.
- PAN/Aadhaar Requirement: Providing your PAN is necessary to avail of TCS credits and exemptions.
How to Pay TCS on Foreign Remittance?
Banks and authorized dealers collect TCS at the time of remittance and deposit it with the government. It will be reflected in your Form 26AS, which can be checked via the income tax portal.
Conclusion
Understanding TCS on foreign remittances helps you plan your international transactions better. Ensure to keep track of the tax rates, exemptions, and refund options to optimize your remittance experience while staying compliant with tax laws.
