Planning to go abroad or buy stocks from the overseas market? Then get ready to pay more as the Finance Bill has revised the conditions for levying Tax Collected at Source (TCS).
The Finance Bill has proposed an amendment in Section 2066 of the Income Tax Act 1961.
Accordingly, remittance for buying overseas tour package will attract TCS at the rate of 20 per cent without any threshold limit during any financial year. Earlier, it was 5 per cent without any threshold.
Similarly, for any other case, rate of TCS will be 20 per cent without any threshold. This could include buying shares overseas. Earlier, the provision prescribed applying TCS at the rate of 5 per cent of the amount or the aggregate of the amount in excess of ₹7 lakh.
Finance Secretary T V Somnathan said: “This aims to plug the leakages.” Also, people going for holiday abroad or buying properties there, they are in higher tax brackets, so they can pay higher TCS, he said.
Amit Maheshwari, Partner with AKM Global, a tax and consulting firm, said: “This would pose challenges for people intending to go for foreign travel and who wish to invest in overseas stocks as it will increase their immediate outlay.” TCS refers to mechanism where sellers collect tax from the buyers and deposit it with the government.
Meanwhile, there is no change in some provision. This means for the purpose of education, if the amount being remitted out is a loan obtained from any financial institution, rate of TCS will continue to be 0.5 per cent of the amount or the aggregate of the amount in excess of ₹7 lakh.
Same provision will apply for remittance towards education and for the purpose of medical treatment. These changes will take effect from July 1, 2023.