No TCS on foreign remittances of up to Rs 7 lakh in a year: Govt

June 29, 2023: The government on June 28 deferred its decision to charge 20% TCS (tax collected at source) on foreign remittances through credit card under the Liberalised Remittance Scheme (LRS).  The Centre has also suspended its decision to change 20% TCS on overseas remittances under the LRS, like tour expenses till October 1.

There will be no TCS on foreign remittances of up to Rs 7 lakh in a financial year even after the October 1 deadline, the finance ministry clarified in a statement issued late on June 28.

In the Budget this year, certain changes were announced to the TCS system on payments under the LRS, and on overseas tour packages. These were to take effect from July 1, 2023. It was also announced in March that credit card payments would be brought under the LRS.

“To give adequate time to banks and card networks to put in place requisite IT-based solutions, the government has decided to postpone the implementation of its May 16, 2023, e-gazette notification. This would mean that transactions through international credit cards while being overseas would not be counted as the LRS and, hence, would not be subject to TCS. The press release dated 19th May 2023 stands superseded,” the ministry said.

For the first Rs 7 lakh remittance under the LRS, there will be no TCS. Beyond this threshold, TCS will be 0.5% if remittance for education is financed by education loan, 5% in case of remittance for education/medical treatment and 20% for others.

For purchase of overseas tour programme package, the TCS shall continue to apply at the rate of 5% for the first Rs 7 lakh per individual per annum; the 20% rate will only apply for expenditure above this limit, the ministry said.

Summary of old and new TCS rates