Emails that are not meant for me: Tax Collected at Source(TCS) Provision

Wednesday, 25 November 2020

Tax Collected at Source(TCS) Provision – All you need to know

Tax Collected at Source(TCS) Provision on your foreign remittances

Dear Saurabh Kumar,

The Union Budget FY 2021 has introduced a new Tax Collected at Source (TCS) provision on foreign remittance with effect from Oct 1, 2020. As per the mandate, a 5 % (where PAN/ Aadhaar of customer i.e remitter is available) tax collection at source has to be done for all outward remittances over INR 7 lakh, done under the Liberalised Remittance Scheme (LRS), except if it is remitted for the purpose of pursuing education through a loan obtained from any financial institute, then the rate of TCS shall be 0.5%. The same will be collected by ICICI Bank (Remitter Bank).

If PAN / Aadhaar of customer i.e. remitter is not available, then TCS shall apply at a higher rate of 10%.

Key points on the new tax provision:

1.	TCS shall be applicable on the amount in excess of Rs 7 lakh in a financial year and not on the total amount.

2.	In cases where the amount is remitted for the purpose of pursuing education through a loan obtained from any financial institute, rate of TCS shall be 0.5% on the amount exceeding Rs 7 lakh.

3.	Remitter can claim credit for the tax collected by the Bank, where PAN/ Aadhaar is provided while filing income tax returns (ITR) in India.

4.	TCS is applicable at PAN level and not Account level