Update: On February 17, 2023 Economic Times reported that new-age stock investment platforms may soon ask the Indian government to restrict the proposed 20 percent levy on foreign remittances to high-net individuals (HNIs) and high-value transactions and exempt retail investors investing in US equity instruments from the new regime. Earlier... The Budget 2023-24 increases the Tax Collected at Source (TCS) for foreign remittances under the Liberalised Remittance Scheme (LRS) to 20%, except for medical treatment and educational purposes. It will come into effect from July 1, 2023, the government said. This change would make it more expensive for individuals to invest in foreign instruments like stocks, mutual funds, properties, cryptocurrencies, and more. Earlier, the tax rate for this was 5% for all remittances crossing the Rs 7 lakh threshold. After the proposed change, there will not be any upper or lower limit for taxation, all transactions will attract a TCS of 20%. [caption id="attachment_177921" align="aligncenter" width="612"] www.indiabudget.gov.in[/caption] Does this affect mutual funds investing in foreign stocks? The LRS scheme allows Indian "residents individuals" to remit funds up to $250,000 abroad. This change "doesn't affect the mutual funds or ETFs investing overseas as these don't come under LRS," said Zerodha. Impact on investors and businesses Yes, this change will impact individual investors who plan to invest outside the country. Mehul Sheth told Moneycontrol, “Investing in immovable or movable assets abroad such as property, foreign stocks, mutual funds, bonds abroad or even cryptocurrency would come under the purview of 20 percent TCS.…
