Tax-Free Foreign Remittances up to Rs700,000 Annually for NR
New Delhi: Expenditure on lodging accommodations, leisure activities, acquisition of consumer products, and various other expenditures incurred by Indian tourists in their foreign destinations such as Dubai and Abu Dhabi will remain stable throughout the remainder of this year.
"Indian Finance Ministry Delays Implementation of 20% Tax on Overseas Expenditures"
This development arises due to the recent decision by the Indian Finance Ministry to defer the implementation of a 20 percent tax on annual overseas expenditures made by Indian citizens. Initially, this tax was scheduled to be enforced from July 1, which coincides with the peak season for outbound tourism from India , "The Finance Ministry carefully reviewed numerous suggestions received from banks, the travel industry, and the general public regarding the new tax," stated an official announcement made on Wednesday. "As a result, it has been decided to allow more time for the introduction of the revised tax collection at source (TCS)."
"Indian Finance Ministry's Deferred Tax Excludes International Tour Packages from 20% Increase"
The newly proposed tax would have also encompassed the sale of international tour packages. A significant number of Indians opt for pre-packaged tours while visiting popular tourist destinations such as the UAE. If not for the deferment of the tax, these tour packages would have become 20 percent more expensive starting next week , "The usage of international credit cards by Indian nationals while overseas will not be considered as part of the Liberalised Remittance Scheme (LRS) and will consequently be exempt from TCS," clarified the Ministry in a statement released yesterday.
"Tax Exemption for Education Remittances Abroad, Postponement of Proposed TCS Increase"
Furthermore, remittances made for the purpose of education of Indian children studying abroad, including in UAE campuses, will not be subjected to any tax if they fall below the threshold of Rs700,000 ($8,500). However, remittances exceeding this limit are already subject to a TCS of 0.5 percent , Likewise, remittances made for medical treatments and tour packages abroad that surpass the Rs700,000 threshold are currently subject to a TCS of five percent. Indian media today remarked that the proposed increase in TCS is effectively put on hold, at least for the time being.