Tax Collected at Source (TCS) is a new tax regulation, announced by the Government of India, effective 1 October 2020 for remittances under the Liberalised Remittance Scheme (LRS). The regulation stipulates a 5.0% tax must be charged on payments exceeding ₹7 lakh (700,000 INR; approximately 10,000 USD) within India’s financial year from April to March.
The PAN (Permanent Account Number) of the payer will be used in determining TCS applicability. If TCS is applicable, Flywire will collect TCS on top of the amount to be paid to your institution and Flywire’s banking partner will remit the TCS collected to the tax authorities in India.
A TCS certificate will be issued quarterly by Flywire’s banking partner to the payer’s email address. The tax certificate can be used to claim the amount when filing your annual tax return.
As per Section 206CCA of Income Tax Act 1961, an applicant who has not filed the ITRs for the previous two years and aggregate of TCS & TDS is Rupees fifty thousand or more in each of the above two previous years, then the applicant will be treated as specified person and TCS will be applied at twice the prescribed rate or 5% whichever is higher.
If you are a specified person, our local banking partner will reach out to you directly to inform you the TCS amount due and how to make the TCS payment.