Ladies, Planning An International Trip? Know These 4 Things About The New 20% TCS Rule On Foreign Remittance
It's important for you to know this!
Travelling or studying abroad has never been cheap. And I guess ladies, we all have some plans to take solo trips abroad or spend our bachelorette in some nice exotic foreign location. However, all these trips need a lot of financial planning beforehand, and awareness about the different taxes on foreign travel is necessary too! We are sure, you must have heard about the new 20 per cent TCS rule for foreign remittance and must have had many questions in mind. What is it, how it works and from when will it be applied? We have brought you some answers from Finance Influencer Anushka Rathod, and she has shared her knowledge on the same for a better understanding.
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What Is The New 20 Per cent TCS Rule For Foreign Remittance?
TCS stands for Tax Collection At Source. Now, this tax on foreign remittances is collected when some money is sent abroad, and the authorised banks or remittance service providers collect it. It is also applicable on the abroad tour packages. Right now, India was collecting a 5 per cent tax on foreign remittances of more than 7 lakh in a financial year. However, with the new TCS rule, this percentage has been increased to 20, and it was earlier going to apply from July 1. The date has been pushed to October 1, 2023.
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How Does This Work?
Finance Influencer Anushka Rathod has shared her knowledge on this, as per which the new TCS rule will also apply to abroad tour packages. This means that if the tour package is within the 7 lakh budget, the 5 per cent TCS will be collected on it, and if it exceeds the limit, the TCS can go up to 20 per cent. Another important point to note here is that this tax collected at source is like a prepayment from which you can claim the remaining credit when you file your tax returns.
Things To Know While Making Abroad Travel Plans
As per Anushka Rathod, an individual should keep in mind the new TCS rule starting from October while making travel plans as the ticket prices, hotels or tour packages can have higher TCS rates. She further adds that using a zero Forex credit or debit during payments on a foreign trip can be beneficial. This is because it helps you skip any extra charges on the currency conversion by making the payments in foreign currency.
Also Read: 5 Things To Remember When Taking Education Or Home Loan
Will It Make Foreign Travel Expensive?
Anushka Rathod said that instead of directly making abroad travel expensive, the new TCS rule can create cash flow problems for travellers. The TCS will have to be paid to the service providers or during hotel bookings upfront and a heavy outflow of money in the beginning can cause financial strains. You will only get the remaining credit after filing tax returns, and that hampers financial flexibility. Anushka Rathod added that any individual thinking of an abroad trip should have done their financial planning.
So, ladies, we hope this helps!
First Published: July 26, 2023 2:48 PMHow To Negotiate Salary With HR? Remember These 4 Tips Because Yeh Skill Bhi Zaroori Hai!
