Under the Liberalised Remittance Scheme under Indian Foreign Exchange Laws, all resident individuals in India, including minors, are permitted to remit up to $2,50,000 per financial year (April–March) for any permissible current or capital account transaction or a combination of both.
Further, recently, Budget 2023 increased Tax Collected at Source (TCS) for foreign remittances under LRS from 5 per cent to 20 per cent (except for education and medical purposes). This amendment to the law will be effective from July 1, 2023. However, after the latest press release from the Finance Ministry, on May 19, 2023, it was clarified that payments made using international debit/credit card up to ₹7 lakh would be excluded from LRS limit and thus not attract TCS.
Thus, any remittance out of international credit or debit card in excess of ₹7 lakh would immediately attract TCS of 20 per cent on/after July 1, 2023. If an individual, whom we assume would be resident in India, uses his debit card to send a gift to his children who are resident overseas as an outward foreign remittance up to ₹7 lakh, that would not be liable to TCS and the above would apply.
The writer is a Partner with BDO India LLP
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