In a relief to Indians looking to vacation abroad, the government has proposed to waive tax collected at source on overseas tour packages worth less than Rs 7 lakh under the Liberalised Remittance Scheme, according to the Finance Bill.
Norms on tax collected at source were introduced in the budget last year. According to those norms, a 20% tax collected at source was mandated on most remittances worth over Rs 7 lakh in a financial year under the LRS. The exception was amounts spent on medical treatment and education, which had a 5% tax collected at source for payments above Rs 7 lakh. Remittances, apart from those on overseas tour packages, below Rs 7 lakh did not attract a tax collected at source.
“Retrospective amendment proposed from Oct. 1, 2023, onwards and previous rate of 5% to apply between July 1, 2023, and Sept. 30, 2023. Clarity awaited on refund of taxes already collected but not deposited with revenue authorities for transactions post-Oct. 1, 2023,” said tax firm EY to NDTV Profit.
The interim budget, which concluded on Feb. 1, did not have any major announcement on tax. The focus was on infrastructure spending and ease of doing business remain among key focus areas.
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