TCS on Outward Remittances LRS

The revised TCS rates w.e.f. 1^st October, 2023, as advised by CBDT are as under:

Slab	Nature of payment	Earlier rate before Finance Act,2023	New rate w.e.f., 1st October,2023
1.	LRS for education, financed by loan from financial institution	Nil upto Rs.7 lakh 0.5% above Rs.7 lakh	Nil upto Rs.7 lakh 0.5% above Rs.7 lakh
2.	LRS for Medical Treatment and education (other than financed by loan)	Nil upto Rs.7 lakh 5% above Rs.7 lakh	Nil upto Rs.7 lakh 5% above Rs.7 lakh
3.	LRS for other purposes	Nil upto Rs.7 lakh 5% above Rs.7 lakh	Nil upto Rs.7 lakh 20% above Rs.7 lakh
4.	Purchase of Overseas tour program package	5% (without threshold)	5% till Rs.7 lakh, 20% thereafter

The amendment in TCS rates, in light of CBDT Circular 11 of 2021 dated 21-06-2021 and Circular 03 of 2023 dated 28-03-2023, also requires charging of higher of ‘twice the prescribed rate’ or ‘5%’ from the‘Non- Filer(Specified Persons)’ and ‘Inoperative PAN’ remitter.

The Non- Filer is defined as a person who satisfies both the following conditions:

1. He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of section 139 has expired. e.g. for financial year 2021-22, two previous years are FY20 18-19 and FY 2019-20.

2. Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.

The remitter with ‘Inoperative PAN’ is one who has been allotted Permanent Account Number (PAN) as on 01/07/2017 and have not linked their Aadhaar and PAN.

Accordingly, the applicable rates of TCS for Non-Filers (Specified Person) or Inoperative PAN vis-à-vis valid PAN/not a specified person will be as under:

Slab for Non-filer/Inoperative PAN	Nature of payment	Customer with valid PAN and not a specified person	Customer without valid PAN/Specified Person (where eligible)
1.	LRS for education, financed by loan from financial institution	Nil up to Rs.7 lakh 0.5%- above Rs T lakh	5% upto Rs.7 lakh
2.	LRS for Medical Treatment and education (other than financed by loan)	Nil upto Rs 7 lakh 5%- above Rs 7 lakh	5%-upto Rs 7 lakh 10%- above Rs 7 lakh
3.	LRS for other purposes	Nil upto Rs.7 lakh 20%- above Rs.7 lakh	5%-upto Rs 7 lakh 20%- above Rs 7 lakh
4.	Purchase of Overseas tour program package	5%- till Rs.7 lakh, 20%- thereafter	10%- till Rs 7 lakh, 20%- thereafter

In view of clarifications shared vide FAQ (copy attached) viz., LRS remittance limit is quaremitter and is independent of the remitting institution.

Further, as TCS is applicable on all LRS remittances, the fund transfer from resident account to account of Non- Resident Indian within India (to NRO) account comes under purview of TCS calculation.