Can I avoid paying TCS?

No, TCS is automatically deducted if your total remittance exceeds INR 7 lakh in a financial year. However, you can plan your transfers to stay below this limit.

What Happens If My Remittance Is Reversed?

If the reversal happens on the same day, the TCS amount might be refunded by the bank. Otherwise, you need to claim it through your Income Tax Return (ITR).

How do I check my refund status?

You can check the status on the income tax e-filing portal or the TIN NSDL website using your PAN and relevant assessment year details.

How can I claim a refund for TCS?

When filing your ITR, include the TCS amount. Ensure all TCS amounts are reflected correctly in Form 26AS. The Income Tax Department will process your return and calculate any refund due.

What documentation is needed to claim TCS refund?

Key documents include Form 27D from the service provider, Form 26AS from the income tax portal, a PAN card, bank statements, and an ITR acknowledgment receipt.

What If I Am Filing as a Hindu Undivided Family (HUF)?

The process is similar to individual filing. Ensure all HUF-specific details are correctly entered in the ITR. Gather all TCS-related documents, like Form 27D and PAN.

Can I claim TCS on foreign travel and education remittances?

Yes, you can claim TCS on foreign travel and education remittances. Ensure to include the TCS amount in your ITR and verify it with Form 26AS.

What Are the TCS Rates for Different Types of Remittances?

The TCS rate for most remittances is 20% for amounts exceeding INR 7 lakh. However, for education purposes funded by loans, the rate is 0.5% beyond INR 7 lakhs, and for medical treatments and education funded otherwise, the rate is 5%.

Category – Finance

Refund Of TCS On International Remittance – The What & How!

Updated On:

Sep 26, 2023

Karthik

Overview of TCS

In the Union Budget that Finance Minister Nirmala Sitharaman presented in February 2023, there were some changes related to finance. One key addition was the introduction of the New Tax Regime and another significant development was the implementation of Tax Collected at Source (TCS) for transactions. Section 206C of the Income Tax Act outlines which goods sellers must collect tax from buyers on. It’s worth noting that the increased TCS rate on remittances could make these transactions more expensive for individuals who send or receive money from abroad. As per the 2023 budget under the Liberalized Remittance Scheme (LRS), the TCS rate for remittances has risen from 5% to 20%. This higher rate will now apply to all transfers except those specifically meant for medical purposes. Here are a few examples:

Foreign Tour Packages
Providing Loans/Sending Gift Money To Relatives Living Abroad
Buying Stocks Of Foreign Companies
Purchasing Property Abroad
Immigrants Remitting Funds To Their Foreign Bank Account

Eligibility For Claiming A Refund Of TCS

If someone has paid TCS (Tax collected at Source) on remittances, they can request a refund under the following conditions:

If the total TCS amount is higher than the taxpayer’s tax liability for the year
If the taxpayer files their ITR (Income Tax Return) on time
If the taxpayer possesses supporting documents for remittances, such as bank statements and Forex card statements

Scenarios Where TCS Refund Can Be Claimed

When an individual sends money overseas for medical purposes, they are required to pay a Tax Collected at Source (TCS) rate of 5%. If their actual tax liability for the year is more than 5%, they have the option to claim a refund for the excess TCS paid.
If someone sends money abroad for reasons other than education or medical treatment, they need to pay a TCS rate of 20%. If their actual tax liability turns out to be more than 20%, they can request a refund for the additional TCS amount paid.
In cases where an individual uses a travel card to send money but doesn’t utilize the entire loaded amount on the card, they can claim a refund for the TCS paid on the unused portion.

Also read: Exemptions From TCS – TCS on International Money Transfer

How Do I Claim Refunds Of TCS On Foreign Remittances?

To claim a refund for TCS (Tax Collected at Source) on remittances, follow these steps:

Make sure to submit your Income Tax Return (ITR) before the deadline.
Head to the ITR website. Locate the section dedicated to TDS (Tax Deducted at Source).
Submit a request for a refund of TCS paid on remittances.
Include a bank statement or Forex card statement that clearly shows the deduction of TCS.
Provide any supporting documents related to the remittance.
After filing your ITR for the financial year, the Income Tax Department will thoroughly approve your refund claim.
Should you have any uncertainties or inquiries concerning your refund, it is advisable to seek guidance from a tax professional.

Please note that these steps are crucial in ensuring a process for obtaining your refund on TCS paid towards remittances.

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Our related blogs on TCS

The Road Ahead

The purpose of increasing the TCS rate is to generate tax revenue and stimulate spending. This will have an impact on the long-term growth of the Indian economy. It’s worth noting that claiming a refund for TCS on foreign remittances can be a time-consuming procedure. It requires attention to tax laws so it is advisable to consult a tax professional for guidance. Maintaining records and documentation of your remittances can significantly assist with the refund process. Being well-informed and proactive will increase your chances of claiming a refund. Remember, it’s crucial to take all measures to ensure compliance and explore refund options.

Tags: managing finances