Finance Minister Nirmala Sitharaman raised the Tax Collection at Source (TCS) rate for foreign remittances under the Liberalised Remittance Scheme (LRS) from 5 per cent to 20 per cent. They will now be required to pay a higher tax. This will apply to overseas tour packages and other remittances except for education and medical purposes.
TCS on remittances made under the LRS was introduced in 2020. The purpose was to monitor the remittances made and to correlate these with the income tax returns of the persons who made the remittances. Presently, different rates of TCS apply depending on the nature of the transaction.
There was also an annual limit of Rs 7 lakh on remittances which has now been removed.