If you wish to invest abroad or want to go abroad. So now there is going to be more burden on your pocket, because Finance Minister Nirmala Sitharaman has proposed to increase the tax on this item in the budget. Read this news…
Those who wish to travel abroad will now have to spend more from their pocket than before. The reason for this is the announcement of Finance Minister Nirmala Sitharaman in the budget, in which the tax on remittances sent from India abroad has been increased to 20 percent. This tax will also be applicable on investing abroad.
It has been said in the budget that if money is sent abroad from India for any work other than medical treatment or studies, then collection of tax at source (TCS) Will be done. The rate of tax will decide on the work for which you are spending the money.
At present, TCS is deducted at the rate of 5 percent, if you are going to travel abroad. While you are sending money abroad for anything other than education and medical treatment, then 5 percent TCS is deducted on the amount exceeding Rs 7 lakh.
The new system will be implemented from July 1
If we understand the provision of the Finance Minister’s budget speech correctly, now not only has the rate of this tax increased, but its collection will also be on the full amount. Now apart from medical and education, TCS equal to 20 percent of the entire amount sent abroad will be taken. The new rule will come into force from 1 July 2023.
Understand the math of remittance tax
Now we explain to you the mathematics of remittance in easy language. Suppose you are spending Rs 4 lakh on a foreign tour package, then from July 1 you will have to pay 20 percent TCS i.e. Rs 80,000 on the entire amount. Now at the rate of 5 percent it works out to Rs 20,000.
Now suppose you are sending money abroad for anything other than education or medical treatment, then from July 1 you will have to pay TCS at the rate of 20 percent. Whereas now it is charged at the rate of 5 percent on the amount of more than 7 lakh rupees.
Understand for example, if you are sending 8 lakh rupees from India for investment in foreign shares or to any of your relatives, who have neither gone there for treatment nor for studies. Then he will have to pay TCS of Rs 1.6 lakh from July 1. Whereas now it only costs Rs 5,000 as it is fixed at the rate of 5 per cent on the amount above Rs 7 lakh.
TCS amount can be refunded
Well, you can claim this amount deducted in TCS while filing your income tax return. Banks provide a certificate while deducting TCS, which you can claim in your income tax return. After this, you will have to pay the same amount of tax in which income tax slab you come, rest you can get this amount back in the form of income tax refund or credit.
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