Remittances high, low tax payment

Remittances high, low tax payment

Subject :Economy

Section: Fiscal Policy

Section:

Context: Finance Secretary said the measures have been taken based on information that people are making high-value remittances but their tax returns are not reflecting proportionate income tax payments.

More on the News:

• To trace high-value spending and tax avoidance by high net-worth individuals, the government announced a sharp hike in the tax collected at source (TCS) rate — to 20 per cent from 5 per cent, on overseas tour packages and on certain remittances out of India under the liberalised remittance scheme (LRS)
• This has been proposed with the exception of LRS remittances for education and medical treatment purpose
• The Finance Bill, through the Budget 2023-24, amended Section 206C of the Income Tax Act levying a higher TCS on overseas tour programme packages.
• Also, 20 per cent TCS will be applicable on certain remittances without any threshold as against the current scenario of 5 per cent tax rate where funds in excess of Rs 7 lakh are sent out of India under the Liberalised Remittance Scheme of the RBI.
• The amendments will come into effect from July 1, 2023.

About Liberalised remittance scheme: https://optimizeias.com/liberalised-remittance-scheme/