Pay 5% Tax On Foreign Money Transfer From October 1st; But Tax Exempted For These Transfers
As per new developments, there will be a 5% tax any funds conducted to foreign countries. This will be applicable from October 1.
Read on to find out all the details.
5% Tax To Be Applicable On Foreign Fund Transfer Above Rs. 7 Lakh
As per reports, any amount that has been transferred abroad will be eligible for a tax-collected-at source (TCS). However, this doesn’t apply if the tax is already deducted at the source (TDS).
This tax will be applicable if the amount of the transactions is above Rs. 7 lakhs.
The provision to collect tax on remittances was first introduced in the Finance Act of 2020 subject to riders. It was notified on March 27 that it will be effective from October 1.
5% tax will be applicable on foreign tour packages, whereas, the tax on other foreign remittances will be applicable only for the amount spent above Rs. 7 lakh.
For any foreign remittances that are related to education and are funded by loans, the tax will be 0.5% for any amount above Rs. 7 lakh. This decision has been made taking into account the numerous Indian students who go to foreign countries for education.
Individuals Can Send A Maximum Of Rs. 250,000 Abroad
Under the liberalized remittances scheme by the Reserve Bank of India, individuals will be permitted to remit a maximum amount of Rs. 250,000 abroad every year.
As per reports, the remitted amount can be invested in shares, debt instruments, and also to buy any immovable properties in foreign countries.
However, buying and selling of foreign exchange abroad, or purchase of lottery tickets or sweepstakes, proscribed magazines, etc. is not permitted.
Customers have also been made aware of the applicability of the tax that will be collected at the source on remittances from October by many financial institutions.
As per reports, the Union finance ministry husband extending the scope of both the taxes: deducted at source and collected at source. Also, electronic payments have also been encouraged so that there will be a better idea of the transactions in the Indian economy which would be matched to the spending pattern of the assessees according to their reported taxable income.