Finance Bill, 2023TCS Tax to be Collected at Higher Rates on Certain RemittancesProposal by Finance Bill, 2023

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The Tax Publishers Finance Bill, 2023--TCS Tax to be Collected at Higher Rates on Certain Remittances--Proposal by Finance Bill, 2023 CA. Nisha Bhandari The Finance Bill, 2023 proposes to increase the rate of collection of tax at source in case of certain foreign remittances and in case of sale of overseas tour programme as provided in sub-section (1G) of Section 206C. The learned author in this write-up analyses the existing provision as well as the proposed provision. 1. TCS on foreign remittance through LRS and on selling of overseas tour package The Finance Act, 2020 has extended the scope of TCS in respect of overseas remittance and for sale of overseas tour package by inserting a new sub-section (1G), w.e.f. 1-10-2020. The existing Section 206C(1G) provides that every person, - (a) being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India; (b) being a seller of an overseas tour programme package, who receives any amount from a buyer, being the person who purchases such package, shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to five per cent of such amount as income-tax. 2. Threshold limit in case of remittance other than for overseas tour package The first proviso to existing sub-section (1G) providesthat the authorised dealer shall not collect the sum, if the amount or aggregate of the amounts being remitted by a buyer is less than seven lakh rupees in a financial year and is for a purpose other than purchase of overseas tour programme package. Thus presently the threshold limit of Rs. 7,00,000 is not available in case of sale of overseas tour packages. 3. Amount on which tax to be collected The second proviso to existing sub-section (1G) provides that the sum to be collected by an authorised dealer from the buyer shall be equal to five per cent of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package. 4. Remittance where related to education loan The third proviso to existing sub-section (1G) provides that the authorised dealer shall collect a sum equal to one half per cent of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in Section 80E, for the purpose of pursuing any education. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Finance Bill, 2023--TCS

Tax to be Collected at Higher Rates on Certain Remittances--Proposal by Finance Bill, 2023

CA. Nisha Bhandari

The Finance Bill, 2023 proposes to increase the rate of collection of tax at source in case of certain foreign remittances and in case of sale of overseas tour programme as provided in sub-section (1G) of Section 206C. The learned author in this write-up analyses the existing provision as well as the proposed provision.

1. TCS on foreign remittance through LRS and on selling of overseas tour package

The Finance Act, 2020 has extended the scope of TCS in respect of overseas remittance and for sale of overseas tour package by inserting a new sub-section (1G), w.e.f. 1-10-2020.

The existing Section 206C(1G) provides that every person, -

(a) being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India;

(b) being a seller of an overseas tour programme package, who receives any amount from a buyer, being the person who purchases such package,

shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to five per cent of such amount as income-tax.

2. Threshold limit in case of remittance other than for overseas tour package

The first proviso to existing sub-section (1G) providesthat the authorised dealer shall not collect the sum, if the amount or aggregate of the amounts being remitted by a buyer is less than seven lakh rupees in a financial year and is for a purpose other than purchase of overseas tour programme package.

Thus presently the threshold limit of Rs. 7,00,000 is not available in case of sale of overseas tour packages.

3. Amount on which tax to be collected

The second proviso to existing sub-section (1G) provides that the sum to be collected by an authorised dealer from the buyer shall be equal to five per cent of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package.

4. Remittance where related to education loan

The third proviso to existing sub-section (1G) provides that the authorised dealer shall collect a sum equal to one half per cent of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in Section 80E, for the purpose of pursuing any education.