Money flowing out of India is being taxed with tax write-off at source added on services like foreign tour packages and remittances because the outgoing funds flow is sought to being taxed.
The Budget 2020-21 has mandated a 5 per cent collection at source for remittances over Rs 7 lakh.
Mohandas Pai, Chairman, Aarin Capital has criticised the TDS on foreign remittances. He said: "This is extremely wrong; Why is there a Tax on our own tax paid money once we remit? Where is simple living?."
Directionally, it's like that cash flowing out of India is being taxed within the sort of remittances or travel. Some people have said that they're going to make the remittances for education by March 31 because the provision kicks in from April 1.
A new TDS provision has been introduced on foreign remittance. Authorized exchange dealer receiving an amount of Rs 7 lakh or more during a fiscal year for remittance out of India under the LRS scheme of the RBI shall collect TCS (tax at source) of 5 per cent from the customer , being an individual remitting such amounts out of India. within the case of non PAN/Aadhar cases the speed is 10 per cent.
LRS is employed for sending money for youngsters studying abroad, buying property abroad and buying stocks listed in exchanges abroad. The LRS is restricted to $250,000 per annum per person. ON sending quite Rs 7 lakh year, 5 per cent of that quantity are going to be deducted by the FX dealer and paid as TCS to the tax department.
A TDS provision has been introduced on the road packages also. the vendor of overseas tour packages shall collect TCS of 5 per cent from the customer .
The provision won't apply just in case the operator is susceptible to deduct tax at source under the other provision of the act and therefore the amount has been deducted. it'll also not apply if the customer is that the government or any another person notified by the govt
There is no lower limit on this provision. Travel operators are cribbing that this may hurt their business.