Investing globally? New tax rule imposing 20% TCS from October.

Planning to invest in foreign stocks or mutual funds? Starting October 1, a new Tax Collection at Source (TCS) rule will apply. Get the lowdown on what this means for your portfolio.

Tax Time!

If you have foreign shares in your stock portfolio, a new tax rule starting on 01-Oct-2023 might impact your investments. The Tax Collection at Source (TCS) rule is set to change, affecting individuals investing in foreign investments. This includes stocks, mutual funds, or cryptocurrencies abroad.

How much TCS will you need to pay? Under the new rule, the rate on outward remittances of forex will be raised to 20%, up from the current 5%, for amounts exceeding Rs 7 lakh in a financial year. But how does this affect your investments?


  • As of 01-Oct-2023, a new TCS rate of 20% applies to foreign investments like foreign stocks, mutual funds, and property exceeding Rs 7 lakh.

  • Debit and forex card transactions will face a 20% TCS if spending exceeds Rs 7 lakh.

  • The TCS rate for education and medical purposes remains at 5% above Rs 7 lakh.

  • File your income tax return (ITR) to claim a refund of TCS contributions.

TCS on Investments

If you're considering investing in foreign stocks, mutual funds, cryptocurrencies, or property abroad, you will have to pay a 20% TCS on amounts exceeding Rs 7 lakh in a financial year. However, domestic mutual fund schemes with exposure to foreign stocks won't be subject to this new rule.

TCS Limit for Foreign Remittances

The threshold for TCS on foreign remittances has been raised to 20% for amounts over Rs 7 lakh, starting 01-Oct-2023. This means that any overseas investments exceeding this limit will now incur a higher tax.

Also ReadAll You Need To Know About TCS On Foreign Remittance

TCS on Debit, Credit, or Forex Cards

While credit card transactions remain exempt from TCS, debit or forex card users must take note. If your spending on these cards exceeds Rs 7 lakh in a financial year, you will be subject to a 20% TCS rate. Hence, keep track of your spending if you frequently use these cards for international transactions.

TCS for Education and Medical Treatment

For those remitting funds for education and medical treatment, the TCS rate remains at 5% above the Rs 7 lakh threshold. This collected TCS can be utilised as a credit when settling your income tax dues.

The Takeaway

Remember, TCS is not a separate tax; it's recorded in Form 26AS as a tax credit, which can be used to offset your tax liability while filing your ITR. For high-net-worth individuals (HNIs), TCS can reduce their liability of advance tax. However, for others with less tax liability, this increased TCS rate could become an added cost of remittance, as the refund will only be available when filing the return of income.

Find the latest articles on stocks here.

Also ReadBought A New Car? Here's How To Claim 1% TCS Paid On New Car Purchase?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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