New Delhi: The country’s largest bank State Bank of India (SBI) informed new rules related to tax to its customer. The central government issued new rules related to collecting taxes on sending money abroad. The new rules will be applicable from 1 October 2020.
According to the Finance Act 2020, under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI), the person sending money abroad will have to pay TCS. An additional 5% tax collected at source (TCS) on the amount has to be paid, if the accountholder send money to his child studying abroad or help a relative financially.
The government has given few exemption in case, the tax will not be applicable on all the money sent abroad. TCS will not be charged if you send Rs 7,00,000 or less for the education of children. If education loan is more than Rs 7,00,000, 0.5% TCS will be levied. TCS will not be applicable on the amount sent abroad for any tour package. TCS will not be applicable on any amount of Rs 7,00,000 or less sent abroad for any work. It is applicable if the amount is more than that. However, in the case of tour packages, a higher amount is also exempted.
Sharad Kohli, founder and chairman of KCC Group, told that TDS is deducted on many kinds of payments abroad. The gifts, medical treatment, investment in property, help of relatives, was not covered under TDS. These were exempted from TDS under RBI’s LRS. Indian can send up to 2.5 lakh dollars annually under RBI’s LRS. To bring this money into tax radar, a rule has been made for charging TCS.