Blog Summary: According to budget 2025, Forex transactions below Rs 10 lakhs will not be subject to Tax Collected at Source (TCS). For Forex transactions exceeding Rs 10 lakhs in a financial year, TCS of up to 20% will apply. Check out the answers to some frequently asked questions about TCS on forex transactions.
Union Budget 2025 includes some significant updates about TCS on forex transactions and outward remittances. Even though TCS will still be applicable, the Tax Collected at Source (TCS) threshold under LRS has been proposed to increase from ₹7 lakh to ₹10 lakh.
Learn more about the new Tax Collection at Source (TCS) and how BookMyForex can help you adjust it.
Q1. What is the effective date of implementation of the new Tax collected at source (TCS) thresholds?
A: As per union budget 2025, there will be no TCS on forex transactions below Rs 10 lakh in a financial year. The effective date of implementation is 1st April 2025.
Q2. What kind of tax is TCS?
A: Tax Collected at Source (TCS) is a tax collected from a customer at the time of Sale of any forex product for all purposes covered under LRS. However, TCS is not an additional tax and can be adjusted against your total income tax liability & claimed while filing tax returns. Salaried persons may also be able to adjust the amount of TCS from payment of their TDS deduction by their employers.
Q3. What is the TCS taxation rate as per the union budget 2025 and which transactions will be affected?
A:All forex purchases and remittances (other than for education, medical and business/ commercial purposes) over a threshold limit of Rs 10 lakhs in a financial year executed under the LRS will be liable to be deducted @20%, starting April 1, 2025. The TCS for education and medical treatment will be 5% over the limit of Rs 10 lakh and 0% where the source of funds for the remittance is an education loan from an authorized financial institution). No TCS is applicable to business/ commercial transactions.
Q4. Can I get my TCS amount back?
A: Yes, most certainly. Unlike TDS, Tax Collected at Source (TCS) can be adjusted while filing tax returns.
Q5 Can I adjust my TCS tax liability without waiting until the end of the financial year?
A: Yes, if you are an individual taxpayer, you can claim TCS and have it adjusted as an advance tax payment. You can also adjust it against your total income tax liability while filing returns. BookMyForex will share an automated TCS certificate with the customers on their registered email id, so business owners can adjust tax in advance tax payment. Salaried individuals, may also be able to adjust the Tax Collected at Source (TCS) from TDS deductions. This is however subject to the employer’s perception of genuine TCS-paid claim and if the same can be verified on the income tax portal.
Q6. Will TCS on foreign remittances through Liberalized Remittance Scheme (LRS) be applicable on the entire amount of remittance or only on an excess of Rs 10 Lacs?
A:Yes, TCS will be applicable only to the amount in excess of Rs 10 lakhs in a financial year, according to the new TCS regulations proposed in union budget 2025.
Q7. What are the different products for which tax collection is applicable?
A: The tax at source (TCS) will be applicable to all forex purchases/ outward remittance(s) under the Liberalized Remittance Scheme (LRS) as per FEMA Act 1999, which includes the purchase of foreign currency notes, Forex Cards, outward remittances and also for payments made for purchase of overseas tour packages.
Q8.TCS was previously not applied to international credit card spends. Does that still apply?
A: The latest notification issued by the Finance Ministry states that international credit card spends will not attract Tax Collected at Source till further notice.
Q9. How much TCS will be applied in the case of Non-PAN transactions?
A: LRS transactions without PAN are not allowed.
Q10. Will GST be applied to the Tax collected at source (TCS)?
A: No, GST will not be applied to the tax collected at source (TCS).
Q11. What if the customer bought forex of Rs. 12,00,000, paid TCS, and then encashed Rs. 5,00,000? Will the TCS be refunded or will apply again?
A: TCS is applicable only upon the purchase of forex or outward remittance ONLY.
Q12. What if a customer bought a tour worth Rs. 6,00,000 and now wants to remit forex worth of Rs. 3,00,000, what will be the percent of TCS charged?
A: TCS shall be applicable to all categories of LRS payments, regardless of the mode of payment. For 2024-25, if the amount of tour package/forex purchase/forex remitted out of India exceeds Rs 7 lakhs, TCS will be charged at a 20% rate. However, as per new regulations proposed in the union budget 2025, no TCS will apply for transactions below Rs 10 lakhs so, the TCS will be zero as the total forex transaction is Rs 9 lakh in this case.
Q13. Is there any change in the tax implication on remittances for the purpose of overseas education in the latest budget 2025?
A: For remittances done for the purpose of overseas education, 5% TCS will be applicable on the amount being remitted in excess of INR 10 Lacs according to the budget 2025. TCS would be 0% in the cases of the amount remitted originated via an education loan from a financial institution.
Q14. What is the tax implication for remittances to foreign tour operators under LRS?
A: Any amount remitted to foreign tour operators exceeding Rs 7 lakhs in a financial year is being charged 20% TCS from Oct 1, 2023. However, the threshold is proposed to increase to Rs 10 lakh from Rs 7 lakh, as per the union budget 2025.
Q15 Will TCS (Tax Collected at Source) be applicable if a foreign exchange facility is availed in Cash or Forex cards?
A:TCS at 20% is applicable for the purchase of foreign currency cash or forex pre-paid cards over a threshold limit of Rs 7 lakhs in a financial year, starting Oct 1, 2023. But the threshold is proposed to increase to 10 lakh as per the union budget 2025. Hence, the purchase of currency or forex card below Rs 10 lakh in a financial year will not be subject to Tax Collected at Source (TCS)
Q16. How can customer raise their request to BookMyForex for getting TCS certificate?
A: BookMyForex will fast-track issuance of TCS and will without asking send out automated TCS certificates to all its customers.
