Budget 2023: Foreign Travel, Investments To Attract Higher TCS
Budget 2023 has proposed a steep increase in the rates of tax collected at source for certain remittances.
The Finance Bill of 2023 has increased the tax collected at source for certain remittances.
The provision—Section 206C—lays down TCS to be paid on foreign remittances through the Liberalised Remittance Scheme and on the sale of overseas tour packages.
So far, for overseas tour packages, the applicable TCS rate has been 5% without any threshold limit. This has now been increased to 20%.
For any other payment under LRS, so far 5% of the amount or the aggregate of the amounts in excess of Rs 7 lakh attracted the TCS provision. Here, too, the rate has been increased to 20%. Also, the threshold limit of Rs 7 lakh has been removed.
This provision would pose challenges for people intending to go for foreign travel and who wish to invest in overseas stocks, as it will increase their immediate outlay, Amit Maheshwari, partner at AKM Global, highlighted. "You can take credit, claim refund but it's a cashflow issue."
It's unclear why the government has increased the TCS rate for overseas tour packages and LRS remittances.
This amendment will take effect on July 1, 2023.