My bank has collected TCS on the money I sent abroad for my daughter's university fees, and my travel agent has collected on the tour package. What does s.206C(1G) actually require, and at what rate and threshold?
Section 206C(1G) puts the collection duty on two people: an authorised dealer who receives an amount for remittance from a buyer remitting under the Reserve Bank's Liberalised Remittance Scheme, and a seller of an overseas tour programme package who receives any amount from the buyer of the package. The main charge is five per cent, collected at the time of debiting the amount payable by the buyer or at the time of receipt, whichever is earlier; the first proviso disapplies collection by an authorised dealer where the amount or aggregate of amounts remitted by a buyer in a financial year is less than ten lakh rupees, and the second proviso raises the rate to twenty per cent on the amount in excess of ten lakh rupees where the remittance is for purposes other than education or medical treatment.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, s.206C(1G), as it stands after the amendments effective 1 April 2025. It bears on section 206C(1G), section 206C, section 80E, section 10(20), section 206CC of the Income Tax Act 1961, in TDS Defaults and How Tax Law Is Read matters.
This is the provision an ordinary family meets when it sends money abroad, and every figure in it has moved twice in three years. The threshold in the first, second and fourth provisos was raised from seven lakh rupees to ten lakh rupees with effect from 1 April 2025 (footnote 25, whose marker stands in both the first and the second proviso, and footnote 32 in the fourth: substituted for "seven" by Act No. 7 of 2025). The third proviso no longer charges anything at all on an education remittance funded by a loan from a financial institution as defined in s.80E(3)(b) — before 1 April 2025 that proviso charged one-half per cent on the excess over seven lakh rupees, and the substituted proviso now says the authorised dealer 'shall not collect the sum'. There is a real construction question the text does not resolve: the main charge is five per cent 'of such amount', while only the twenty per cent provisos are expressly worked on 'the amount or aggregate of amounts in excess of ten lakh rupees'. So for an education or medical remittance that crosses ten lakh rupees, the statute as printed does not say in terms that five per cent applies only to the excess — the first proviso merely lifts the collection duty below the threshold. Note also that the threshold proviso is worded for the authorised dealer alone, so on an overseas tour programme package the five per cent main charge is not subject to any threshold in the text and only the twenty per cent slab above ten lakh rupees is expressly carved out by the fourth proviso.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Sub-section (1G) applies to (a) an authorised dealer who receives an amount for remittance from a buyer, being a person remitting such amount under the Liberalised Remittance Scheme of the Reserve Bank of India, and (b) a seller of an overseas tour program package who receives any amount from a buyer, being the person who purchases such package. Collection is at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the buyer, by any mode, whichever is earlier, at five per cent of such amount. Seven provisos follow, in this order as printed: (1) an authorised dealer shall not collect where the amount or aggregate of amounts being remitted by a buyer is less than ten lakh rupees in a financial year; (2) the sum to be collected by an authorised dealer shall be twenty per cent of the amount or aggregate in excess of ten lakh rupees remitted in a financial year where the amount being remitted is for purposes other than education or medical treatment; (3) an authorised dealer shall not collect the sum if the amount being remitted out is a loan obtained from any financial institution as defined in clause (b) of sub-section (3) of section 80E, for the purpose of pursuing any education; (4) the seller of an overseas tour programme package shall collect twenty per cent of the amount or aggregate in excess of ten lakh rupees received from the buyer in a financial year; (5) an authorised dealer shall not collect on an amount in respect of which the sum has been collected by the seller; (6) the sub-section does not apply if the buyer is liable to deduct tax at source under any other provision of the Act and has deducted such amount, or is the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10, or any other person notified by the Central Government subject to specified conditions; (7) the sum collectible on or after 1 July 2023 and before 1 October 2023 is to be collected in accordance with the sub-section as it stood on 1 April 2023. The Explanation defines 'authorised dealer' as a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security, and 'overseas tour programme package' as any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature.
As the sub-section stands from 1 April 2025: the main rate is five per cent; the LRS threshold below which an authorised dealer does not collect is ten lakh rupees in a financial year; the rate on the excess over ten lakh rupees is twenty per cent where the LRS remittance is for purposes other than education or medical treatment; there is no collection at all on an LRS remittance which is a loan from a financial institution as defined in s.80E(3)(b) for pursuing any education; and on an overseas tour programme package the rate is twenty per cent on the amount in excess of ten lakh rupees received in a financial year, the five per cent main charge applying otherwise. Collection is excluded where the buyer is liable to deduct tax at source under any other provision and has deducted it, where the sum has already been collected by the seller of the package, and for the specified governmental and notified buyers.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on the same pages. No judicial reasoning is involved.
Provided also that the authorised dealer shall not collect the sum if the amount being remitted out is a loan obtained from any financial institution as defined in clause (b) of sub-section (3) of section 80E, for the purpose of pursuing any education:
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Handle my notice → Ask a CA on WhatsAppSection 206C(1G) puts the collection duty on two people: an authorised dealer who receives an amount for remittance from a buyer remitting under the Reserve Bank's Liberalised Remittance Scheme, and a seller of an overseas tour programme package who receives any amount from the buyer of the package. The main charge is five per cent, collected at the time of debiting the amount payable by the buyer or at the time of receipt, whichever is earlier; the first proviso disapplies collection by an authorised dealer where the amount or aggregate of amounts remitted by a buyer in a financial year is less than ten lakh rupees, and the second proviso raises the rate to twenty per cent on the amount in excess of ten lakh rupees where the remittance is for purposes other than education or medical treatment. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 206C(1G), section 206C, section 80E, section 10(20), section 206CC of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.206C(1G), as it stands after the amendments effective 1 April 2025. This is the provision an ordinary family meets when it sends money abroad, and every figure in it has moved twice in three years. The threshold in the first, second and fourth provisos was raised from seven lakh rupees to ten lakh rupees with effect from 1 April 2025 (footnote 25, whose marker stands in both the first and the second proviso, and footnote 32 in the fourth: substituted for "seven" by Act No. 7 of 2025). The third proviso no longer charges anything at all on an education remittance funded by a loan from a financial institution as defined in s.80E(3)(b) — before 1 April 2025 that proviso charged one-half per cent on the excess over seven lakh rupees, and the substituted proviso now says the authorised dealer 'shall not collect the sum'. There is a real construction question the text does not resolve: the main charge is five per cent 'of such amount', while only the twenty per cent provisos are expressly worked on 'the amount or aggregate of amounts in excess of ten lakh rupees'. So for an education or medical remittance that crosses ten lakh rupees, the statute as printed does not say in terms that five per cent applies only to the excess — the first proviso merely lifts the collection duty below the threshold. Note also that the threshold proviso is worded for the authorised dealer alone, so on an overseas tour programme package the five per cent main charge is not subject to any threshold in the text and only the twenty per cent slab above ten lakh rupees is expressly carved out by the fourth proviso. If it applies to you, the first step is this: Identify which limb applies: an authorised dealer under FEMA s.10(1) receiving an LRS remittance, or a seller of an overseas tour programme package. The Explanation to the sub-section defines both terms.
Sub-section (1G) applies to (a) an authorised dealer who receives an amount for remittance from a buyer, being a person remitting such amount under the Liberalised Remittance Scheme of the Reserve Bank of India, and (b) a seller of an overseas tour program package who receives any amount from a buyer, being the person who purchases such package. Collection is at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the buyer, by any mode, whichever is earlier, at five per cent of such amount. Seven provisos follow, in this order as printed: (1) an authorised dealer shall not collect where the amount or aggregate of amounts being remitted by a buyer is less than ten lakh rupees in a financial year; (2) the sum to be collected by an authorised dealer shall be twenty per cent of the amount or aggregate in excess of ten lakh rupees remitted in a financial year where the amount being remitted is for purposes other than education or medical treatment; (3) an authorised dealer shall not collect the sum if the amount being remitted out is a loan obtained from any financial institution as defined in clause (b) of sub-section (3) of section 80E, for the purpose of pursuing any education; (4) the seller of an overseas tour programme package shall collect twenty per cent of the amount or aggregate in excess of ten lakh rupees received from the buyer in a financial year; (5) an authorised dealer shall not collect on an amount in respect of which the sum has been collected by the seller; (6) the sub-section does not apply if the buyer is liable to deduct tax at source under any other provision of the Act and has deducted such amount, or is the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10, or any other person notified by the Central Government subject to specified conditions; (7) the sum collectible on or after 1 July 2023 and before 1 October 2023 is to be collected in accordance with the sub-section as it stood on 1 April 2023. The Explanation defines 'authorised dealer' as a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security, and 'overseas tour programme package' as any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. As the sub-section stands from 1 April 2025: the main rate is five per cent; the LRS threshold below which an authorised dealer does not collect is ten lakh rupees in a financial year; the rate on the excess over ten lakh rupees is twenty per cent where the LRS remittance is for purposes other than education or medical treatment; there is no collection at all on an LRS remittance which is a loan from a financial institution as defined in s.80E(3)(b) for pursuing any education; and on an overseas tour programme package the rate is twenty per cent on the amount in excess of ten lakh rupees received in a financial year, the five per cent main charge applying otherwise. Collection is excluded where the buyer is liable to deduct tax at source under any other provision and has deducted it, where the sum has already been collected by the seller of the package, and for the specified governmental and notified buyers.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on the same pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "Provided also that the authorised dealer shall not collect the sum if the amount being remitted out is a loan obtained from any financial institution as defined in clause (b) of sub-section (3) of section 80E, for the purpose of pursuing any education:"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, s.206C(1G), as it stands after the amendments effective 1 April 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 206C(1G), section 206C, section 80E, section 10(20), section 206CC, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. As the sub-section stands from 1 April 2025: the main rate is five per cent; the LRS threshold below which an authorised dealer does not collect is ten lakh rupees in a financial year; the rate on the excess over ten lakh rupees is twenty per cent where the LRS remittance is for purposes other than education or medical treatment; there is no collection at all on an LRS remittance which is a loan from a financial institution as defined in s.80E(3)(b) for pursuing any education; and on an overseas tour programme package the rate is twenty per cent on the amount in excess of ten lakh rupees received in a financial year, the five per cent main charge applying otherwise. Collection is excluded where the buyer is liable to deduct tax at source under any other provision and has deducted it, where the sum has already been collected by the seller of the package, and for the specified governmental and notified buyers. It arises in TDS Defaults and How Tax Law Is Read matters, on section 206C(1G), section 206C, section 80E, section 10(20), section 206CC of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For an LRS remittance, aggregate all remittances by the same buyer in the financial year before deciding whether the ten lakh rupee threshold in the first proviso is crossed — the proviso speaks of 'the amount or aggregate of the amounts being remitted by a buyer'. Where the remittance is an education loan from a s.80E(3)(b) financial institution, produce the sanction letter and disbursement trail to the authorised dealer: the third proviso as substituted from 1 April 2025 removes collection entirely, with no threshold at all. Where the payment already suffers TDS, invoke the sixth proviso: the sub-section does not apply if the buyer is liable to deduct tax at source under any other provision of the Act and has deducted such amount. Keep the deduction evidence, because the carve-out is conditional on the deduction actually having been made, not merely on liability. Where an overseas tour package is bought through an authorised dealer's remittance, invoke the fifth proviso: the authorised dealer shall not collect on an amount in respect of which the sum has been collected by the seller — collect the seller's Form 27D so the same amount is not hit twice. For a default relating to the window 1 July 2023 to 1 October 2023, apply the last proviso: the sum is to be collected in accordance with the sub-section as it stood on 1 April 2023. This is the deferral, now written into the statute itself. Claim the credit in the buyer's return — TCS under this sub-section is tax, not a levy, and is creditable against the buyer's own liability or refundable.
Still good law. The text above is what both the Year 2025 and the Year 2026 departmental pages print, and they agree word for word, which is the strongest evidence available this pass that no later amendment has displaced it. That is not a substitute for reading the current Finance Act: no Finance Act text was retrieved this pass, and the Act numbers in the footnotes were not matched to Finance Act names from an independent source. Anything stating a seven lakh rupee LRS threshold, a twenty per cent main rate, or a one-half per cent charge on an education loan is superseded by amendment and must not be applied to a period on or after 1 April 2025. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Every rate, threshold and proviso above was transcribed this pass from two departmental pages that print identical text — https://incometaxindia.gov.in/w/section-206c-36 (Year: 2025) and https://incometaxindia.gov.in/w/section-206c-39 (Year: 2026), both headed 'Income-tax Act, 1961' and 'Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc'. The amendment history is taken from the footnote list printed on the -36 page, which identifies amending Acts by number only: footnote 23 (words 'out of India' omitted by Act No. 08 of 2023 w.e.f. 1-7-2023); footnote 24 ('five' substituted for 'twenty' by Act No. 8 of 2024 w.r.e.f. 1-7-2023, 'twenty' having earlier been substituted for 'five' by Act No. 08 of 2023 w.e.f. 1-7-2023); footnote 25 and 32 ('ten' for 'seven' by Act No. 7 of 2025 w.e.f. 1-4-2025); footnote 26 (words 'and is for the purposes of education or medical treatment' omitted by Act No. 8 of 2024 w.r.e.f. 1-7-2023); footnote 27 ('twenty' for 'five' by Act No. 8 of 2024 w.r.e.f. 1-10-2023); footnote 29 ('is for purposes other than' for 'is for the purposes of' by Act No. 8 of 2024 w.r.e.f. 1-10-2023); footnote 30 (third proviso substituted by Act No. 7 of 2025 w.e.f. 1-4-2025, the prior proviso having charged one-half per cent on the excess over seven lakh rupees on an education loan); footnote 31 (fourth proviso inserted by Act No. 08 of 2024 w.r.e.f. 1-10-2023); footnote 33 (the 1 July to 1 October 2023 transitional proviso inserted by Act No. 8 of 2024 w.r.e.f. 1-7-2023). The correspondence of those Act numbers to the popular names Finance Act 2023, Finance Act 2024, Finance (No. 2) Act 2024 and Finance Act 2025 was NOT independently verified from a source read this pass — the departmental footnotes give numbers only, and this entry deliberately reproduces them as numbers. No CBDT circular or press release on the deferral was retrieved this pass, so none is cited; the deferral is described only as the statutory transitional proviso now records it. The base on which the five per cent main charge is computed for an education or medical remittance above ten lakh rupees is a genuine open point on the text, flagged rather than resolved. Corroborated this pass on a third departmental page, https://incometaxindia.gov.in/w/section-206c-35 (Year: 2024 (No. 2)), headed "Income-tax Act, 1961" and "Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc", which prints the sub-section in its pre-amendment form: a seven lakh rupee threshold in the first, second and fourth provisos, and a third proviso charging "a sum equal to one half per cent of the amount or aggregate of the amounts in excess of seven lakh rupees … if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E". That page independently confirms both the threshold rise and the replacement of the one-half per cent charge, and it confirms that the five per cent main rate, the twenty per cent "other than education or medical treatment" wording, the already-deducted-TDS proviso and the 1 July to 1 October 2023 transitional proviso all predate 1 April 2025 and were not altered by Act No. 7 of 2025. Note also that the substituted third proviso narrowed the reference as well as the rate: the prior text said "as defined in section 80E", the current text "as defined in clause (b) of sub-section (3) of section 80E". The -39 page does print a footnote apparatus (numbered 61 to 73 for this section), contrary to what the first pass recorded. Both current pages print an omission marker immediately after "in a financial year" in the first proviso (footnote 26 on -36: the words "and is for the purposes of education or medical treatment" omitted by Act No. 8 of 2024, w.r.e.f. 1-7-2023). The date in 'decided_on' is the date from which the position stated takes effect, not a decision date. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
As the sub-section stands from 1 April 2025: the main rate is five per cent; the LRS threshold below which an authorised dealer does not collect is ten lakh rupees in a financial year; the rate on the excess over ten lakh rupees is twenty per cent where the LRS remittance is for purposes other than education or medical treatment; there is no collection at all on an LRS remittance which is a loan from a financial institution as defined in s.80E(3)(b) for pursuing any education; and on an overseas tour programme package the rate is twenty per cent on the amount in excess of ten lakh rupees received in a financial year, the five per cent main charge applying otherwise. Collection is excluded where the buyer is liable to deduct tax at source under any other provision and has deducted it, where the sum has already been collected by the seller of the package, and for the specified governmental and notified buyers.
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