Bankers see rise in LRS remittances before new TCS rate kicks in

The TCS, is not in itself, a tax and credit for the amount paid on any transaction is available to the person to adjust against their tax liability for the year

Bankers expect an increase in overseas remittances under the Liberalised Remittance Scheme (LRS) in coming months as individuals seek to send funds abroad before a revised tax rate for such remittances becomes effective from July 1.

In the Union Budget for the next financial year, the government raised the Tax Collection at Source (TCS) rate for foreign remittances under the LRS from 5 per cent to 20 per cent. This will apply to overseas tour packages and other remittances except for education and medical purposes.

An earlier annual limit of Rs 7 lakh on remittances has also now been removed.