Union Budget 2025: FM seeks to Increase TCS from ₹7 Lakh to ₹10 Lakh

Thе Uniоn Вudget 2025 wаs presented by thе Finаnce Minister Nirmаlа Sithаrаmаn on February 1st 2025 аt 11:00 а.m. befоre thе Pаrliаment. Thе Uniоn Вudget is thе аnnuаl finаnciаl stаtement thе Gоvernment of Indiа prеsеnts, outlining its estimаted revenue аnd expenditure fоr thе upcоming fiscаl yeаr аnd serving аs а roаdmаp fоr thе country's еconomic prioritiеs.

Finance Minister Nirmala Sitharaman announced an increase in the Tax Collected at Source (TCS) threshold under the Reserve Bank of India’s (RBI) Liberalized Remittance Scheme (LRS). The threshold has been raised from ₹ 7 Lakh to ₹10 lakh. Providing relief to individuals making overseas remittances for permissible purposes.

The Liberalized Remittance Scheme allows Indian residents to remit a specified amount abroad for expenses such as education, travel, medical treatment and investments. Under Section 206C(1G) of the Income Tax Act, TCS is levied on such remittances once they exceed a defined threshold.

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The latest budget proposes a higher threshold for TCS on LRS transactions, increasing it to ₹10 Lakh from ₹7 Lakh. The budget also proposes remittances related to education funded by loans from financial institutions, where no TCS will be applicable. The higher TCS rate provisions introduced in the previous budget will remain relevant beyond the new threshold.

This change is expected to facilitate financial transactions for individuals and families and allow them to send money abroad. The relaxed threshold before TCS applies will benefit individuals making remittances for legitimate purposes, such as higher education or medical treatment.

In order to promote global wealth diversification, the government thinks that the higher threshold will entice more people to invest in real estate and overseas assets. Since fewer transactions will now be covered by TCS, taxpayers and financial institutions handling remittances will benefit from a simplified compliance process.

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The administration has emphasized that these changes lessen administrative difficulties and encourage voluntary tax compliance. The government's overarching goal of simplifying tax laws without sacrificing revenue collection is in line with the threshold extension.

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