The interim Budget 2024 has set the ball rolling for formally introducing the hike in the tax collected at source (TCS) rate on foreign remittances, announced in 2023 into the Income Tax Act by way of an amendment. This will happen once the bill is passed by the Parliament.
It was in the last Budget that the government had announced a hike in the TCS rate on foreign remittances under the Liberalised Remittance Scheme (LRS) and on bookings of foreign tour packages from the then 5 percent to 20 percent for foreign spends exceeding Rs 7 lakh in aggregate (per year, per individual). This was to take effect from July 1, 2023. The implementation date was later postponed to October 1, 2023. But this was not formally incorporated in the Income Tax Act.
A Moneycontrol report published in November 2023 had mentioned the possibility of this legislation coming through in Budget 2024.
Confirming the amendment, Kuldip Kumar, Partner, Mainstay Tax Advisors, said "There is no change in TCS rates, except legislating the amendments (rate change of 5 percent to 20 percent) announced in 2023."
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