What is tts ttb tcs tcb?

TCB --Travellers Cheque - Buying rate. Telegraphic transfer buying (TTB) and selling (TTS) rates So for example- if you're looking to make an outward remittance from India, and send money from your INR account to someone with a bank account held in a different currency, you need to know the selling rate (TTS). Since the cost of foreign currency exchange work is merely reduced, TTB and TTS are determined to make.

Finance Minister Nirmala Sitharaman’s proposed Union Budget for 2023 included some significant updates related to foreign remittance. The RBI’s Liberalized Remittance Scheme (LRS) allows people in India to send money abroad for education, medical treatment, business, and other purposes. In Budget 2023, major changes have been proposed to the TCS structure on Foreign Remittance Transactions under LRS. There is a lot of confusion surrounding this new tax rule, but we are here to clarify everything for you.

For foreign outward remittances under LRS (other than for education and medical purposes), the Union Budget 2023 proposes a Tax Collection at Source (TCS) of 20%, starting July 1, 2023. Prior to this proposal, a TCS of 5% was applied to outward foreign remittances over a threshold of INR 7 lakhs.Â

Starting July 1st, 2023, the new TCS will be in effect. Does this mean that medical and education remittances are not subject to TCS? Well, taxes will still be imposed, but the proposed tax rate has not changed for these two purposes. For education and medical treatment, a TCS of 5% will be applied, and 0.5% for remittance related to education abroad, only when the source of funds has come through a loan from a financial institution. You can check the present TCS rate and proposed TCS rate in the table below:

Please note that TCS is not an additional charge and can be adjusted against your total income tax liability & claimed while filing tax returns. One can also claim a refund if the remittance is from an income that is already tax-deducted at source (TDS).

A resident individual can transfer money abroad to the limit of USD 2,50,000 per financial year. It falls under the LRS which is created by the Reserve Bank of India. This LRS limit can be carried out as a one-time transaction or through multiple transactions.

Here we take a few examples to explain to you the tax implications on foreign remittance.

Let’s assume someone made the remittance for the tour package & purchased a Rs 6 lac tour package during a financial year.

In this case, regardless of the amount of the tour package that you purchase, you will be charged a 20% TCS as per the new proposed rate, starting July 1, 2023. So, you are liable to pay {(6,00,000)*(20/100)}=Rs 1,20,000 as TCS. Prior to this proposal, remittances for overseas tour packages were subject to a TCS of 5%.

Consider that someone wants to remit Rs. 8,00,000 as education fees. For remittances made for education, the proposed TCS rate remains unchanged. In this case, a person will be charged a TCS of 5% of the amount or the aggregate amount over Rs. 7 lakhs. So, the amount of TCS in this case will be {(8,00,000-7,00,000)*5/100}=Rs 5000.

Now let’s assume that someone has taken an education loan of Rs. 8,00,000 from a Financial institution and wants to remit these funds for an education Fee. In this case, that person will be charged 0.5% of the amount or the aggregate amount over Rs. 7 lakhs. The amount of TCS to be paid is {(8,00,000-7,00,000)*0.5/100}= Rs 500.

Let’s assume that someone remitted Rs. 15,00,000 in April 2023, will he be liable to pay 20% TCS?

Well, no, this rule only applies to the remittances made on after July 1, 2023 and hence, the old TCS rate will apply in this case.

Yes, most certainly. This tax is just like TDS (Tax deducted at source) that is cut on your salary for which you can claim a tax refund while filing the income tax return. It will be reflected in your Form 26AS.



Checkout how BookMyForex can help you adjust TCS

Q1. What is the effective date of implementation of the new proposed Tax Collected at Source (TCS)?

A: From July 1, 2023, 20% Tax Collected at Source (TCS) provision on all forex transactions & outward remittances will be implemented.

Q2. What transactions will be impacted by this new TCS provision?

A: All forex transactions and/or remittances (other than for education and medical purposes) in a financial year done under the LRS will now be liable for 20% TCS. The TCS on remittance for education and medical treatment is still the same i.e. 5%, and 0.5% for remittances, where funds for education have come from a loan. Forex transactions done for business/corporate travel do not fall under the LRS and will not be subject to any tax collected at source (TCS).

Q3. Will GST be applied to the Tax collected at source (TCS)?

Maybe you’re an entrepreneur and need to pay a supplier overseas, or you want to transfer money to a family member studying abroad - whatever your reason for sending money to an international account, you need to understand how the exchange rate for the transaction is set.

In this guide, we'll clarify the difference between telegraphic transfer (T/T) buying and selling rates in a simple way. Let's jump right in.

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Let’s start at the beginning. A telegraphic transfer — which is also often called a TT, telex transfer, or a T/T bank payment — is a broad term for transferring money from one bank account to another - usually involving moving the money from one country to another, and often between different currencies.

If you’re sending money back to your home country, this payment might also be described as a remittance - but it’s basically the same thing.

When you look up the exchange rates used for TT payments, you’ll often come across a chart or set of figures which describe several different exchange rates. The ones we are interested in are telegraphic transfer buying (TTB) rates and telegraphic transfer selling (TTS) rates.

The TTB rate is the rate at which a bank will convert foreign currency sent to India, into INR. So this means that if a friend or family member sends you a remittance from abroad in foreign currency, the chances are that the rate applied to credit you INR will be the TTB rate.

This buy rate doesn’t apply only to telegraphic transfers. Here are some examples of other transactions that use it¹:

The selling rate is used when the bank is sending INR out of the country, and into a different currency.

So for example, if you’re looking to make an outward remittance from India, and send money from your INR account to someone with a bank account held in a different currency, you need to know the selling rate (TTS).

In general, the TT Selling rate is applicable for¹:

Each bank will have its own approach to setting the buying and selling rates. To be sure of the rate that’s applied to your TT payment, you need to ask the bank directly. However, you can see how the buying rate is calculated by looking at the terms and conditions of your bank.

Let’s take Union Bank of India, for example - one of the larger banks offering retail services.¹

The Union Bank of India terms clarify that the buying rate that’s used is calculated by taking the base rate and reducing it by the bank’s margin, which is set at 0.025% to 0.080%.

The calculation is rounded for ease, and this sets the buying rate applied. You can find the full details for Union Bank of India in the source linked below or here, or check out the terms and conditions of your own bank, to make sure you’re happy with the way the calculation is carried out for your TT payments.

If you’re new to telegraphic transfers, the terminology and processes can be a bit confusing. It’s a smart idea to read up to make sure you understand the way your money is being moved, and to make sure you’re getting the best deal.

Here are some resources that might help.

Like many financial transactions, telegraphic transfers arranged by traditional banks seem to be awash with acronyms and technical language. That can be overwhelming if you’re new to it. Use this simple guide, and the resources we have picked out, to do a bit of research. Knowledge, after all, is power.

And while you’re doing your homework, check out other options for making international payments. You don’t need a degree in finance to understand a specialist services like Wise. The process is designed to be safe and simple - and could save you money.

Banks and money transfer providers often give you a bad exchange rate to make extra profits on international transfers.

Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 8x by using Wise rather than your bank when you send your money abroad.

If you want to give Wise a try to see for yourself how well it can work for you, sign up for a free account. Registration can be done online in minutes.

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Sources:

Sources checked on 10 October 2022