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TCS on LRS

 

As per Union Budget and as per section 206C(1G) of the Income-tax Act, 1961, 20%TCS (Tax Collected at Source) has to be collected from the customer when the value of remittance made under the LRS Scheme of RBI exceeds INR 7,00,000 for the financial year. TCS monitoring & computation is done at individual PAN number level. and not on account number basis.

 

Narration in the statement will be: TCS Mon DD, YYYY DCR Account number.

 

Customer A Makes a remittance of Rs 6,50,000 on Apr 01, 2024 No TCS will be collected
Makes a remittance of Rs 75,000 in the same financial year TCS will be applicable & will be collected on Rs 25,000 at the defined rate.

 

  • Once the threshold is crossed, TCS would be applicable on the incremental amount. Further, the credit of tax collected will continue to the buyer.

Important points:

 

  • TCS amount would be recovered from the customer’s account. Please ensure the account is sufficiently funded to cover the charges.

  • TCS once collected cannot be refunded by the bank in case of any return of transaction or remittances.

  • TCS certificate will be issued to the customer once the quarterly return filing is completed.

 

Please note:- Effective October 1st, 2023, new TCS rates will be applicable on all international remittances over the defined threshold during a fiscal year. For educational & medical spends, TCS will be collected @ 5% of the transaction value above INR 7 lacs. For all other spend categories, TCS will be collected @ 20% of the transaction value above INR 7 lacs

Important Information

Is TCS deduction on LRS transaction a regulatory requirement?

Yes, TCS collection on LRS transactions is a regulatory requirement. This is amended under Section 206C of the Income-tax Act, 1961.

Am I eligible for any tax rebate?

TCS paid can be adjusted against tax payable when individuals who would have paid TCS file Income Tax Returns (ITR) in India. Please consult your tax advisor/consultant for further information.

Is TCS applicable at the Account level or PAN level?

TCS is applicable at PAN level. The LRS limit maintenance, TCS charging and TCS reporting is consolidated at the customer level i.e. at PAN level.

In case of return of transactions post debit from the account, will the TCS get refunded back?

TCS will not be reversed once debited. Remitter can approach for refund from tax authority through ITR or consult with tax advisor for refund/adjustment.

Disclaimer

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