As per the new Union Budget 2023, there will be a considerable investment for International students whether they apply for study abroad programs or go on International trips. Union Budget 2023 significantly mentioned money is spent outside India for any other purposes beyond Education and Health Sector, 20% of the amount will be charged by the bank account and will be deposited with the government along with your name.
According to the new budget policy, except for education and medical treatment tax will be collected at 20% of the entire value. Under the Liberalised Remittance Scheme, the increase in the TCS rate is to target high-value discretionary spending.
Additionally, the Increase in Taxes payment includes high payments for purchasing currency for travel, sending gifts or loans to your friends and families, investing in property abroad and buying foreign stocks.
Furthermore, if you want to transfer money outside India or purchase a property abroad, a 20% deduction will be applied for the same. Also, as per the new Union Budget 2023, if you want to travel abroad and want to book an international tour from July 1, 2023, it will be taxed at 20%. Basically, there is a hike in foreign tax remittance from 5% to 20%. Though, foreign travel is not costlier!
Moreover, in the education industry, remittances for International students, be it for living expenses will face a TCS of 20%. For educational purposes, it is easier if funds are for hostel expenses or tuition fees. But at the same time, it is difficult for a student who has opted for rent accommodation outside the campus.
Ways to Adjust Increase in TCS
Furthermore, Union Budget 2023 has suggested a way for the management of tax collection of the source, TCS can be claimed as an Income Tax refund in cases where there is no taxable income. Or even for purpose of computing advance tax. Here an individual can use a TCS certificate can be used to claim TCS in your ITR filing. TCS collected will be reflected in form 26AS.
It is clearly observable, a 20% tax is excessively high. This shows that while making a payment there is no income earned. This will automatically block a significant amount of cash as tax. This will be considered very aggressive for taxpayers because money is being sent abroad for family and friends to meet their personal expenses or even when people are spending for family vacations.
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