Varsha Gaikwad, former Maharashtra minister, has requested to reduce the TCS rate from the existing 5 per cent to 2 per cent and an increase in the transaction limit from Rs 7,00,000 to Rs 10,00,000
Varsha Gaikwad. Pic/Twitter@VarshaEGaikwad
Mumbai Congress chief Varsha Gaikwad has written to Union Finance Minister Nirmala Sitharaman requesting that the tax collected at source (TCS) on international money transfers be reduced for families sending money to children pursuing education abroad as per The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI).
As per the current regulations, a 5 per cent TCS is levied on transactions exceeding Rs 7,00,000. Varsha Gaikwad, former Maharashtra minister, has requested to reduce the TCS rate from the existing 5 per cent to 2 per cent and an increase in the transaction limit from Rs 7,00,000 to Rs 10,00,000.
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In her letter to Sitharaman, Gaikwad said that increasing the limit to Rs 10,00,000 will provide relief to parents as they will be able to send more money to their children studying abroad.
Reducing the TCS rate from 5 per cent to 2 per cent will also reduce the financial burden on such parents, she said.
"I am writing to draw your kind attention to the recent increase in the tax collected at source (TCS) as per The Liberalised Remittance Scheme (LRS) by the Reserve Bank of India. As per the current regulations, a 5 per cent TCS is levied on transactions exceeding Rs 7,00,000 for families sending education expenses to students studying abroad," she said.
"It is essential to note that many families lack the financial security to pay for education expenses upfront. They often resort to pawning jewellery or mortgaging their houses to acquire the necessary funds," Gaikwad stated in the letter.
"Typically, a student requires Rs 25,00,000 for education abroad. For instance, if a family intends to send Rs 25,00,000 for education expenses, they would incur a substantial TCS fee of Rs 90,000, which places a significant burden on their income," the letter further read.
Gaikwad further said that the TCS amount often acts as a decisive factor for many families wishing to support their children's higher education abroad.
"Therefore, I request you to consider revising the TCS bracket from 5 per cent to 2 per cent and increasing the transaction limit from Rs 7,00,000 to Rs 12,00,000. Such a revision would alleviate the financial burden on students and their families. The TCS amount often acts as a decisive factor for many families wishing to support their children's higher education abroad," she said in the letter.
"I am confident that you will give due consideration to my reasonable request and take the necessary action to ensure a better future for our students," she added.
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