Under this Scheme, all resident individuals, including minors, are allowed to freely remit / avail foreign exchange facility up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

TCS at 5% shall be applicable on all forex transactions under LRS, exceeding INR 7 lakhs in a financial year (Except, i) Transfers from Resident Individual Account to NRO Account towards gift / loan, wherein TCS is NOT applicable AND ii) Remittances towards overseas education made out of loan obtained from a financial institution, for which TCS at 0.5% will be applicable).

For instance, if the total foreign exchange facility availed under LRS in a financial year is INR 10,00,000, TCS at 5% will be applicable on INR 3,00,000 (INR 10,00,000 - INR 7,00,000) and tax collected will be INR 15,000. If subsequent LRS transaction initiated is INR 2,00,000, TCS @ 5% will be applicable on INR 2,00,000 and tax collected will be INR 10,000.

TCS will NOT be applicable and the amount remitted will not be subsumed while considering the threshold limit of INR 7 lakhs per Financial Year.

TCS at 0.5% shall be applicable on the amount exceeding INR 7,00,000 in a financial year under LRS, if the amount remitted is obtained out of a loan from a Financial Institution for pursuing education.

For instance, if the total amount remitted under LRS in a financial year is INR 10,00,000 for pursuing overseas education, TCS at 0.5% will be applicable on INR 3,00,000 (INR 10,00,000 - INR 7,00,000) & tax collected will be INR 1,500.

(Note: The threshold limit of INR 7 lakhs mentioned in FAQs 2 & 3 is a consolidated threshold limit).

TCS at 5% shall be applicable on remittances exceeding INR 7 lakhs in a financial year under LRS.

TCS applicable will be at 5% of the total amount remitted and the amount remitted will not be subsumed while considering the threshold limit of INR 7 lakhs limit.

For instance, if the amount remitted is INR 5,00,000, TCS at 5% will be applicable and tax collected will be INR 25,000.

The new TCS provision will be effective from October 1, 2020.

All forex transactions under LRS will be included in threshold limit of INR 7 lakhs except
i) Transfers from Resident Individual Account to NRO Account towards Gift / Loan
ii) Remittances to Foreign Tour Operators.

Below illustration explains how TCS will be calculated if Mr. XYZ avails foreign exchange facility for different purposes under LRS as listed below.

A – Remittances towards Overseas/ Foreign tour programme package
B – Remittances for pursuing overseas education
C – Other LRS Remittances
D – Transfers to NRO Account under Gift / Loan

Illustration I: TCS calculation if the Mr. XYZ has not utilized the threshold limit of INR 7 Lakhs per FY before October 1, 2020

Illustration II: TCS calculation if Mr. XYZ has already utilized the threshold limit of INR 7 Lakhs per FY before October 1, 2020

(Note: The above illustration applies for financial year 2020-21. For financial year 2021-22, TCS will be applicable effective April 1, 2021 subject to any further changes in the provisions.)

TCS on all forex transactions under LRS shall be applicable from October 1, 2020. However, for tracking the threshold limit of INR 7 lakhs, all forex transactions under LRS (except, i. transfers from Resident Individual Account to NRO Account towards Gift / Loan and ii. remittances to Foreign tour operators done through the Bank) made from April 1, 2020 would be considered, as illustrated in the tables above.

Please note that the foreign exchange facility availed by a Resident Individual Customer under LRS before 1st October 2020 are aggregated for arriving / tracking the threshold limit of INR 7 Lakhs only and not for applying TCS on those drawls which are made before TCS rules are effected. TCS shall be applicable on taxable LRS transactions with effect from 1st October 2020.

For example, in Illustration II table (FAQ 9),

The customer had drawn INR 52 Lakhs (aggregate of B+C) under LRS before 1st October 2020.

When that customer draws forex under LRS for INR 1 Lakh (under item C) on 1st October 2020, the aggregated drawl by the customer under LRS in FY 2020-21 amounts to INR 53 Lakhs.

Thus, the customer has already crossed the threshold limit of INR 7 Lakhs for FY 2020-21 for reckoning TCS on LRS transactions.

Hence, TCS shall be applicable on the customer’s transaction of INR 1 Lakh on 1st October 2020 at applicable rates (5% for items in C column) and hence, TCS of INR 5,000/- is levied.

Yes, TCS at 5% will be applied on LRS transactions exceeding INR 7 lakhs if foreign exchange facility is availed through FCY Cash withdrawal at Branches / loading Forex cards.

Foreign Exchange facility availed through FCY Cash / Forex cards towards Overseas Education out of a loan from a Financial Institution attracts TCS @ 0.5% on drawl exceeding INR 7 lakhs in a Financial Year under LRS (TCS @ 5% shall be applicable in case amount drawn is not obtained out of loan from a Financial Institution).

FCY Cash / Forex Cards availed towards Overseas / Foreign tour programme, will attract TCS @ 5% and the amount drawn shall not be subsumed under the aggregate threshold limit of INR 7 lakhs.

If the PAN updated on the account is of the Minor, the threshold limit of the Minor will be utilized. However, if Guardian's PAN is updated on the account, the threshold limit of the Guardian will be utilized. Accordingly, TCS would also be collected in the name of the person (minor or guardian) whose PAN has been updated on the account.

Foreign Exchange facility under LRS can be availed only if your PAN is updated on Bank's record.

GST will not be applicable on the TCS amount.

The provision will not apply in case the remitter is liable to deduct tax at source under any other provision of the act and the amount has been deducted and if the remitter is Government or any another person notified by the Government.

Yes, remitter / customer can claim credit for the tax collected by the Bank while filing for their tax returns.