Widespread outcry from businesses and taxpayers first compelled the government to issue an elaborate explainer on the rationale for the tax levy. Similarly, a 20% tax was proposed for all remittances under the LRS, as opposed to the extant treatment — a 5% TCS on remittances over ₹7 lakh. “Individuals remitting from their own funds are normally expected to be higher-income taxpayers,” the Ministry stressed, adding that the 20% TCS rate is “not” high. Frequent business travellers may outrun the ₹7 lakh threshold quickly and await clarity on distinguishing personal card spends from business-related spends. In the interest of ease of doing business, the 20% TCS needs to be replaced with a 2% levy, he argued.

Source: The Hindu May 21, 2023 09:13 UTC