Tax Collected At Source Will Apply To All Overseas Spends Above Rs 7 Lakh

Tax collected at source will apply to all transactions beyond Rs 7 lakh a year under the liberalised remittance scheme, irrespective of reason.

As the system for monitoring the remittances under LRS is still being developed by the Reserve Bank of India, the CBDT has notified that the authorised dealers will carry out the process by securing an undertaking from the remitter before the transaction. They would record the details of earlier remittances under LRS by the remitter during the financial year.

"If the authorised dealer correctly collects the tax at source based on information given in this undertaking, he will not be treated as an 'assessee in default,'" the circular said. "However, for any false information in the undertaking, appropriate action may be taken against the remitter under the Act."

No methodology has been stipulated by the ministry, and such undertakings for buying an overseas tour package will be left to the sellers.

The CBDT also clarified that overseas spends on credit cards will continue to remain outside the ambit of the liberalised remittance scheme till further order. This was first announced on Wednesday.