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 and computation is done at the individual PAN level. and not on an account number basis.

 

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

 

Customer AMakes a remittance of ₹6,50,000 on 01 April 2024No TCS will be collected
Makes a remittance of ₹75,000 in the same financial yearTCS will be applicable & will be collected on ₹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 01 October 2023, new TCS rates will be applicable on all international remittances over the defined threshold during a fiscal year. For educational & medical spending, TCS will be collected @ 5% of the transaction value above INR 7 lakh. For all other spend categories, TCS will be collected @ 20% of the transaction value above INR 7 lakh

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 be refunded?

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

Disclaimer

PROCEED