Foreign transactions Charges: How much TCS will be charged on foreign transactions, know 5 important things

Tax Collected at Source: Suppose you pay five lakh rupees through credit card while traveling abroad. So for that you will have to pay Rs 6 lakh as credit card bill. Because the credit card company will charge TCS of 20 percent on Rs 5 lakh.

TCS has been a topic of discussion since last days . But TCS is not a company but it means tax collection at source. From July 1, on foreign travel, the government has made a rule to collect 20 percent TCS for those who pay by credit card. Since then, the atmosphere of discussion on this has heated up.

Not only this, from May 16 onwards, the government had also announced the inclusion of payments made through credit cards abroad in the LRS i.e. Liberalized Remittance Scheme. The result of which is that within a financial year, more than 2.5 million dollars cannot be paid abroad through credit cards. And those who have to pay more than this have to first take permission from RBI.

Know in these 5 points how much TCS you will have to pay on foreign remittance transaction –

1. When you transfer money abroad for remittance, travel and investment under LRS or Liberalized Remittance Scheme, you will have to pay TCS on that.
2. From July 1, 2023, 20% TCS will have to be paid on all remittances except for education or medical treatment.
3. TCS will be 5% on the amount above Rs 7 lakh for education and medical treatment abroad.
4. This amount deducted can be claimed as credit at the time of filing tax as income tax refund or while computing advance taxes.
5. Any payment made by international debit or credit cards up to Rs 7 lakh per financial year is excluded from the LRS limit and no TCS will be levied.

Suppose you pay five lakh rupees through credit card while traveling abroad. So for that you will have to pay Rs 6 lakh as credit card bill. Because the credit card company will charge TCS of 20 percent on Rs 5 lakh. Which will be deposited with the Government of India. 

TCS will have to be paid on every transaction (except for certain exemptions) done on your credit card abroad. Buying goods from foreign websites and getting them delivered in India also comes under TCS. However, you can claim it while filing the tax return.