Will New 20% TCS Rate Impact Foreign Education ? a question among many of the Indian students who are aspiring to study abroad through bank loan or their own funds. Government has hiked the TCS rate to 20 per cent from 5 per cent currently on overseas tour packages and a liberalized remittance scheme for remittance of funds out of India through Budget 2023-24. Also, 20 per cent TCS will be applicable in cases where funds in excess of Rs 7 lakh are sent out of India under the Liberalized Remittance Scheme of the RBI.
The New TCS Rate will come into effect from July 1, 2023.
For the purpose of any education, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E and for medical treatments abroad, the TCS stands at 0.5% and 5% respectively. However, on foreign tour packages and for other remittances such as buying stocks, properties abroad, the TCS limit has been proposed to be 20% in the Budget 2023.
The higher TCS rate will pinch to the students who are going abroad for foreign study with their own sources. The TCS on the university fees has not been changed and kept same as earlier but such students who are aspire for foreign education and the cost of education and living is usually met by parents through LRS, the TCS rate applicable will be 20%.
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Currently, there is Tax Collection at Source (TCS) of up to 5% on remittances of Rs 7 lakh or more in a fiscal year. If the total foreign exchange facility availed under LRS in a financial year is Rs 10 lakh, which you want to remit abroad, a TCS at 5 per cent will be applicable on Rs 3 lakh. (Rs 10 lakh minus Rs 7 lakh) and tax collected will be Rs 15,000.
