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Starting October 1, 2023, individuals in India will be required to pay a higher tax collection at source (TCS) on international remittances exceeding Rs 7 lakh for purposes other than medical and educational.
Under the Liberalised Remittance Scheme (LRS) by the Reserve Bank of India (RBI), individuals can send up to $250,000 abroad annually. However, the new TCS rules will require individuals to pay a 20 percent TCS on any remittance exceeding Rs 7 lakh for purposes other than medical and educational.
The new TCS rules will apply to a wide range of international transactions, including:
· International travel
· Foreign education
· Foreign investments
· Maintenance of close relatives abroad
· Gift or donation to foreign residents
· Any other current account transactions as per Rule 5 of the Foreign Exchange Management (CAT) Rules, 2000
Individuals who make frequent international transactions or who are planning to invest in foreign assets should be aware of the new TCS rules and plan their finances accordingly. They should also keep in mind that the new TCS rules will apply to all remittances made through banks, money changers, and other authorized dealers.
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