Fees paid for a correspondence course from a foreign university where the person receiving such education does not require to travel overseas will be treated as liberalised remittance scheme (LRS) and will face tax collected at source (TCS), according to the circular.
The clarification came two days after the Centre said that international credit card spending while on overseas travel will not face TCS as it will not be counted under the LRS. Remittances up to ₹7 lakh under the scheme will also not face TCS.
The ₹7 lakh threshold will be applicable for the whole financial year. The increased rate of 20% will also come into effect from October 1, instead of July 1.
As per the circular, remittance for education purposes financed by loan from a financial institution will attract TCS rate of 0.5% and will be subject to 5% for other educational purposes or medical treatment. For all other purposes, TCS rate of 20% will be applicable.
Payment for medical consultation or such services from abroad will also come under LRS and will attract TCS, according to a detailed clarification issued in form of frequently asked questions. A person purchasing an overseas tour package from a foreign tour operator for below the ₹7 lakh remittance will attract TCS of 5%.It said purchase of international travel tickets or booking of hotel accommodation, by itself will not be covered within the definition of ‘overseas tour program package’.
It noted that as the banks are not ready with the systems, authorised dealers will have to give an undertaking with details of earlier remittances under LRS during the financial year.
