The Central Board of Direct Taxes ( CBDT ) is increasing its scrutiny of high-value foreign remittances, putting individuals sending over ₹6 lakh overseas under the income tax radar. This review will help the board to identify the discrepancy in the declared income and the remittances made abroad.
This investigation was started because officials found cases where people’s foreign remittances and spending didn’t match their reported income, and there were issues with how Tax Collected at Source ( TCS ) was handled, according to the Economic Times.
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To address this issue, the CBDT has instructed field formations to begin the verification process of Form 15CC, a quarterly statement of outward remittances filed by authorised dealers to the Income Tax Department. Officials familiar with the matter stated that data from Form 15CC has been collected and segregated since 2016, making it available for analysis starting this year.
The board will compile a list of suspicious cases using data from 2020-21 and beyond. Tax officials are required to create a detailed Standard Operating Procedure (SOP) to identify high-risk cases by September 30. The government aims to issue notices to suspected tax evaders by December 31.
Starting October 1, 2023, the TCS rate went up to 20% for remittances over ₹7 lakh. Although it was originally set to begin in July, the new rate was delayed by three months. Initially, the higher rate applied to credit card payments as well, but due to public outcry, the government decided to exclude these transactions from the Liberalised Remittance Scheme ( LRS ) limits.
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However, certain expenses, such as medical and educational costs, are exempted from the elevated TCS rate. Under the Reserve Bank of India’s ( RBI ) LRS, resident individuals can remit up to $250,000 per financial year for permissible transactions.
The TCS is an additional tax levied on top of a product or service’s selling price, collected at the point of sale and subsequently deposited with tax authorities. Taxpayers can offset TCS against their tax liability when filing income tax returns, potentially resulting in refunds if the tax liability is lower than the TCS paid.
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