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Foreign Remittance - An Overview


Foreign Outward Remittance

Transferring funds by a person from India to any beneficiary living outside India (except for those residing in Nepal and Bhutan) for a permissible bonafide purpose under the Foreign Exchange Management Act (FEMA), 1999.

 As of 1st October 2023, all overseas outward remittances, except for medical and educational purposes, exceeding a threshold limit of Rs 7 lakhs in a financial year will be subject to a TCS of 20%.

                                            


Exemption for TCS

TCS applicability is exempted for the following;

1.      Expenses of business visit of employee are borne by entity where such expenses shall be permitted without limit and shall not attract TCS.

2.     TCS on foreign remittance shall not apply to a non-resident.

3.     TCS on foreign remittance shall not apply where TDS is applicable.

4.    TCS will not apply to international credit card transactions abroad.

Documents Required for Foreign Remittance Process

  • Form 15CA and Form 15CB (Forms for Foreign Remittance)
  • Passport and PAN Card as identification documents.
  • Outward Remittance Form for sending money abroad.
  • Bank Statements to verify your financial history.
  • Supporting Documents such as tickets, invoices, etc., related to the remittance.
  • Form A2, A declaration form for foreign exchange transactions.
  • Tax Residency Certificate from the remitter if DTAA (Double Taxation Avoidance Agreement) is applicable.

Note that, when money is sent abroad, a unique reference code is given to you after you provide the details of the beneficiary. The beneficiary has to provide proper ID proof and the same reference code to collect the amount successfully.

Forms for Foreign Remittance

For the bank/authorized dealer to process the foreign remittance, the remittee has to issue signed Form 15CA to the bank after it is uploaded electronically by the remitter at the site of the Income-tax Department.

Form 15CB issued by a Chartered Accountant is required to be furnished before filing Form 15CA.However, Form 15CB is not required;

·        When remittance does not exceed Rs 5,00,000 in a financial year.

·        When an application is made to the Assessing Officer by the person receiving the income to deduct tax at a lower rate or deduct no tax at all and a Certificate is obtained in this respect.

·        When the person responsible for making the payment considers that the whole of the remittance is not taxable and makes an application to the Assessing Officer to charge tax only on the taxable portion and Order is obtained from the Officer in this respect.