The new credit card TCS rule in India means that any person who remits money abroad, either through a bank or a non-banking financial company (NBFC), will have to pay 20% tax collected at source (TCS) on the amount remitted. This rule applies to all remittances, except those made for medical treatment or education. The TCS will be collected by the remitter’s bank or NBFC and deposited with the government. The remitter will be able to claim a refund of the TCS when they file their income tax return.
Previously, the TCS for overseas purchases was 5%. This will grow to 20% on 1 July. This implies that starting in July, your trip reservations will have a 20% upfront cost increase. If you are exchanging INR for any other currency as part of an international travel package: The Bank is mandated to collect TCS at 20% on the total amount of remittances sent during a Financial Year under the recently proposed Budget 2023.
What is the 0.1% Credit Card TCS rule?
When the sale consideration for ANY products (other than exports) exceeds Rs 50 lakhs, the seller must collect tax as TCS from the buyer at a rate of 0.1%. TCS is thus applicable for sales considering more than Rs 50,000.
How will Credit Card TCS Rule Affect Students?
According to the current regulations, if you take out an education loan, you have to pay a small 0.5% TCS on the amount over Rs 7 lakh. The TCS rate is 5% on education expenses over Rs 7 lakh, but if you are self-financing. Importantly, no TCS is applied on foreign exchange purchases for up to Rs 7 lakh in educational expenditures.
According to the announcement made in the Budget 2023, the TCS rate on international transfers, including reservations for travel packages, would dramatically increase from 5% to 20% of the total transaction amount starting on 1 July 2023. This means that if an airline ticket costs Rs 50,000, the corresponding TCS amount would be Rs 10,000, or 20% of the ticket cost.
What is the TCS penalty rate?
1% monthly TCS penalty for late or missed payments will be added. A person is liable to pay interest at a rate of 1% per month, or a portion thereof, on the TCS amount if they fail to collect tax at source (TCS) or do so but fail to deposit it to the government by the deadlines specified. There is no need to worry if you plan to send your child overseas for further education. This is so because international transfers for educational purposes are not covered by the 20% Tax Collected at Source (TCS) provision.
Does Credit Card TCS rule TCS tax have to be paid when travelling abroad?
Get ready to have 20% more cash than your budget if you intend to travel abroad from India after June. This is because every international transaction you make, regardless of the method, is now subject to a 20% tax collected at source (TCS) by the Indian government.
What happens if Credit Card TCS rule TCS is not paid?
According to the Income Tax Act, a fine of Rs 200 must be paid every day that the failure persists if the TCS return is not submitted on or before the due date specified in the Income Tax Act. However, the late fee can be as much as the TCS amount.