Lower tax collected at source rate on funds remitted for education

But a higher rate will be levied if PAN isn't furnished

A new income-tax (I-T) rule on foreign exchange transactions came into effect from October 1. The Government of India, through the Finance Act, 2020, inducted new provisions, enabling levy of 5 per cent tax collected at source (TCS) on foreign remittances above Rs 7 lakh in a financial year. 

This new sub-section (1G) in Section 206C provides for levy of TCS on foreign remittances under the liberalised remittance scheme (LRS). TCS will be collected unless tax has already been deduc­ted at source (TDS) on that amount.  

This provision has been imposed on foreign visits for two reasons. 

Says Suresh Surana, founder, RSM India: