New Tax Collection Rules for Overseas Transactions
Starting October 1, 2023, India will implement new Tax Collection at Source (TCS) rules that will affect various financial transactions, especially those involving overseas expenses. These changes are essential for anyone considering international travel, investing in foreign stocks, mutual funds, cryptocurrencies abroad, or pursuing higher education overseas.
Important Change in the Liberalised Remittance Scheme (LRS)
Under the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS), individuals can send up to $250,000 abroad annually. However, from October 1, 2023, any remittance exceeding Rs 7 lakh for purposes other than medical and educational expenses will be subject to a 20 percent TCS.
Don’t Forget to Nominate in Demat and Mutual Fund Accounts
The Securities and Exchange Board of India (SEBI) has made it mandatory for all demat and mutual fund account holders to either provide nomination declarations or opt out of nominations for their investments by September 30, 2023. Neglecting this crucial task could result in the freezing of Mutual Fund (MF) folios and demat accounts, impacting all debit transactions, including redemptions and withdrawals starting from October 1, 2023.
Aadhaar and PAN Required for Small Savings Schemes
Individuals who have invested in small savings schemes like the Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), National Savings Certificate, and others must submit their Permanent Account Number (PAN) and Aadhaar card documents by September 30, 2023. Failure to do so may lead to the suspension of their accounts from October 1, until the required documents are provided, by the government’s notification.
Birth Certificates to Serve Multiple Purposes
The Registration of Births and Deaths (Amendment) Act, 2023, will come into effect nationwide on October 1, 2023. This change will enable the use of a birth certificate as a single document for various purposes, including admission to educational institutions, issuance of driving licenses, voter list preparation, obtaining an Aadhaar number, registering marriages, and applying for government jobs.
Update on Rs 2,000 Banknotes Expected from RBI
The Reserve Bank of India (RBI) previously announced that September 30, 2023, is the last day to exchange or deposit the withdrawn Rs 2,000 banknotes. Although these notes will continue to be accepted as legal tender beyond this date, the future status of these notes will be determined by the RBI based on the quantity returned or deposited in banks. An update from the central bank regarding the fate of these notes is expected on October 1.
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