Taxes and Deductions
This document is provided for general informational purposes only and does not constitute tax advice. We strongly recommend that you consult with a qualified tax professional for personalized advice. KapnoxForex.com is not liable for any tax-related discrepancies or issues arising from your transactions.
All foreign exchange transactions on our platform are subject to applicable government taxation and deductions, which may be revised from time to time. It is your responsibility to be aware of and comply with all current tax regulations.
GST is a tax on the service of currency conversion, and it is mandatory for all foreign exchange transactions, including purchase, sale, and remittance. The GST calculation is based on the volume of the transaction, which is divided into three slabs as stipulated by the Government of India.
GST Payable on Forex Transactions
| Amount of Forex Transaction (INR) | GST Payable |
|---|---|
| Up to ₹1,00,000 | 0.18% of the Amount of Transaction, subject to a minimum of ₹45 and a maximum of ₹180. |
| Above ₹1,00,000 and up to ₹10,00,000 | ₹180 + 0.09% of Amount of Transaction above ₹1,00,000. |
| Above ₹10,00,000 | ₹990 + 0.018% of Amount of Transaction above ₹10,00,000, subject to a maximum of ₹10,800. |
**Example:** If you purchase foreign currency worth ₹1,00,000, the GST payable would be ₹180. If you purchase currency worth ₹5,00,000, the GST would be ₹180 + 0.09% of ₹4,00,000, which equals ₹540. GST is applicable on both the purchase and sale of foreign currency.
TCS is an advance tax collected at the time of a foreign exchange transaction. It is not a final tax and can be adjusted against your total income tax liability when filing your Income Tax Return (ITR). The government has implemented this method to ensure that all Indian residents engaged in overseas transactions file their ITR and claim their refunds.
PAN Card Requirement
For all transactions under the Liberalised Remittance Scheme (LRS), a valid **PAN card is mandatory**. You cannot conduct LRS transactions without a PAN. We do not encourage transactions with resident individuals holding an 'Inoperative PAN'. As these transactions are linked to your PAN, the TCS information gets automatically updated in **Form 26AS** on the ITR e-filing website, allowing you to track and claim your advance tax.
Applicable TCS Rates
The new TCS threshold is **₹10 lakhs** per financial year, effective April 1, 2025. TCS is applicable only to the amount that exceeds this threshold. The following are the new applicable rates:
| Type of Forex Transaction | Rate of TCS for up to ₹10 Lakhs | Rate of TCS for Above ₹10 Lakhs |
|---|---|---|
| LRS for Education, financed by an education loan | Nil | 0.5% |
| LRS for Medical Treatment or Education (other than loan-financed) | Nil | 5% |
| Overseas Tour Package | 5% of the total amount | 20% of the total amount |
| All Other Purposes | Nil | 20% |
TCS is applicable only upon the purchase of forex or outward remittance. Selling foreign currency is not subject to TCS. These tax rates and rules may change from time to time as per government notifications, and it is your responsibility to be aware of the current applicable rates.
**Example:** If you purchase forex for an overseas trip totaling ₹12,00,000, the TCS would be calculated on the entire amount. For education (not loan-financed), TCS would be 5% on the amount above ₹10,00,000. In this case, 5% of ₹2,00,000, which is ₹10,000. This amount can then be adjusted against your overall income tax liability when you file your ITR.