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Dear Customer,
The Union Budget 2020-21 has introduced a new Tax Collected at Source (TCS) provision on foreign remittances. As per the mandate, a 5% (where PAN is available) TCS has to be done for remittances over ₹7 lakh, for all transactions under Liberalised Remittance Scheme (LRS). |
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| Please find below the frequently asked questions |
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| 1 | Will all my remittances/transactions be impacted by this TCS provision? |
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| All the outward remittances done under LRS will be liable for 5% TCS. The same will be collected by ICICI Bank (Remitter Bank). This tax will be applied only on the transaction value. The tax collection will be applicable for all the purposes which fall under LRS, for e.g., education abroad, maintenance of close relatives, travel, etc. For details, click here. |
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| 2 | Will I have to pay Goods and Services Tax (GST) on the 5% tax collected? |
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| The GST will continue to apply on currency converted amount and on Remittance Service Charge. The same will not be applied on the 5% tax collected. |
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| 3 | On what amount will I have to pay the 5% tax? |
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| If the transaction amount in a financial year exceeds ₹7 lakh, the tax will be applicable on the entire amount. Below example is for your reference: | | Customer A | Makes a remittance of ₹6,50,000 on April 04, 2020 | No tax will be collected |
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| Makes a remittance of ₹7,50,000 on May 05, 2020 | 5% tax will be collected on ₹14,00,000 (₹6,50,000 + ₹7,50,000) | | Makes a remittance of ₹40,000 on December 10, 2020 | 5% tax will be collected on incremental ₹40,000 (as the tax has already been collected on the previous amount of ₹14 lakhs) | | Customer B | Makes single remittance of ₹20,00,000 on 30th April, 2020 | 5% tax will be collected on ₹20,00,000 |
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| 4 | From which day will the tax collection be effective? |
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| The tax collection on foreign remittance will be effective from April 01, 2020. |
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| 5 | What are the scenarios under which the tax will not be collected? |
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| The tax will not be collected if the remitter has already deducted tax at source (TDS) on the same remittance amount under any other provision of the act. It will also not apply for any person notified by the Government. |
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| 6 | Can I claim the tax credit for TCS? |
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| Yes, the remitter can claim the credit for the tax collected by the bank, where PAN is provided. |
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Looking forward to more opportunities to be of service to you. |
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Sincerely,
ICICI Bank Limited |
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