TCS threshold of Rs 7 lakh mixed as Finance Ministry

 TCS threshold of Rs 7 lakh mixed as Finance Ministry

The barrier of Rs 7 lakh under the liberalised remittance programme is the total level for calculating tax collected at source (TCS), regardless of the reason of transfer, such as medical treatment and education, the finance ministry explained on Friday. It said that out-of-country medical charges would cover travel, medical, and daily expenses. Remittance for education will cover the cost of travel, tuition, and other regular study expenditures.

The "overseas tour package" will cover travel costs, hotels, boarding and housing, as well as "expenditure of similar nature," according to the FAQs. Only buying domestic flights or merely a hotel room is not covered.

Concerns highlighted by banks are not addressed in FAQs

Two days after postponing the implementation of higher TCS and making certain critical adjustments in response to criticism from various quarters, the finance ministry released the FAQs.

The government also stated that although it prepares a framework for real-time update of remittance under LRS, the registered dealer can obtain information about prior payments during the financial at the time the transaction is being completed.

The government declared that the approved dealer would not be considered an assessee in default if he accurately collected TCS based on the information provided under this undertaking.

The government provided clarification on the various TCS throughout the first and second halves of the current fiscal year, stating that the Rs 7 lakh threshold is applicable for the full 2023–24 period. Therefore, if the threshold is reached before October 1st, TCS will apply to all subsequent remittances.

The government has also said that purchases of overseas tour programmes that are LRS-classified will be subject to TCS under this classification and will not be subject to return provisions.

Due to the fact that their systems are not designed to handle the proposed tax changes, the FAQs are silent on a number of issues brought up by banks. Nirmala Sitharaman, the FM, has proposed raising TCS for a number of overseas expenditures in the previous budget.