Foreign Remittance Tax rules are changed. Now you need to pay tax when you transfer money abroad. The new rule will be effective from Oct 1, 2020. The provision for a new rule of Tax Collected at Source (TCS) was made in Budget 2020-21.
There are many cases where you need to send foreign remittances such as for meeting education expenses, medical expenses, buying property abroad or stock market investments. The Liberalised Remittance Scheme (LRS) and RBI rules permit up to $2.5 Lakh of foreign remittance to the individual. This means you can remit up to $2.5 Lakh x Rs.76 = Rs. 1.9 Cr outside India. The remittance amount will now be taxed.
In this post, I will share detail about Foreign Remittance New Tax Rule.
Foreign Remittance New Tax Rule
A Sum of 7 Lakhs in a particular financial year is allowed for the outside remittance. In case the amount of remittance is exceeding 7 Lakh you need to pay tax.
The rate of TCS would be 5% if you have PAN/Aadhaar. In case you don’t have PAN card the rate will be 10%. The TCS amount will be collected by the bank/ authorized dealer at the time of remitting money outside India.
Let’s try to understand this by example. Suppose, you want to do remittance of Rs.15 Lakh under the LRS (Liberalised Remittance Scheme). As this amount is exceeding Rs.7 Lakh limit TCS will be charged. The TCS in the above case would be charged to Rs.8 Lakh. As rate is 5%. Total TCS (Tax collected at source) would be Rs. 35000.
If the remittance is made via a loan secured from a bank or financial institution for the education purpose and amount is exceeding 7 Lakh you need to pay TCS at the lower rate. The rate under this case would be 0.5%. Suppose Rs.15 Lakh is remitted for the education purpose via loan the TCS would be Rs.3500.
The TCS for the foreign remittance is not applicable if TDS has been paid by the remitter under any provision of the Income Tax Act. If the remittance is done by the government or government notified person TCS is not applicable.
If the remitter is NRI then to the TCS charged an increase in surcharge as well as health and education cess are applicable.
The rule of TCS applies to foreign travel also. It is also proposed to apply TCS on the sale of an overseas tour package via tour operators. The TCS would be deducted by the tour operator. The entire tour package would be considered including travel, hotel stay, boarding, and lodging while placing the claim.
Takeaways from Foreign Remittance Tax Change
Few important takeaways from the foreign remittance tax change are given below.
TCS does not mean that tax is paid to the government. It is a tax credit amount. You can file an Income tax return and either get the refund or adjust the amount against tax payable.
The new tax rule provision is made not to collect additional tax but to increase tax compliance. Currently, people transferring huge money outside get escape routes from Income tax. The new provision does not allow them to escape.
Income tax returns need to be file for getting a refund of tax collected at source money.
The amount of TCS remains blocked till the refund amount is obtained or credit is adjusted against your tax liability.
Additional paperwork needs to be done along with foreign remittance.
Banks and foreign tour operator needs to maintain additional compliance.
Overall it is a very good step taken by the government to increase the tax net. However, the honest taxpayer needs to suffer as their money gets blocked unnecessarily due to this step.
Losing a job or facing a pay cut can be one of the most stressful experiences in life. Whether it happens unexpectedly or you see it coming, financial instability can create anxiety and uncertainty. However, with the right mindset and strategies, you can navigate through these challenges and emerge financially stronger. This article will guide you on how to protect and manage your finances effectively when dealing with job loss or a salary reduction.
Living a life without a salary or less money would be challenging for many people. You have to change your lifestyle and smartly manage your finance to face and withstand the difficult situation. Here are a few important tips to make yourself ready against the adverse situation of layoff and salary cuts.
Job Loss or Pay Cut – How to Protect & Manage your Finance?
Reduce your Expenses by living a frugal lifestyle
You need to live a frugal or economical lifestyle. The lockdown has taught us that we can live life with minimum expenses. We need not waste money on eating out, entertainment, leisure, and buying unnecessary things.
Find out how you can live life with less money. It is not as troublesome as it sounds. You need to note down all your monthly expenses on the paper. Question every expense and try to reduce or eliminate expenses.
Let me give a few examples –
Suppose you are living in a rented house which is costing you more money. You should think of moving into a smaller house or in another area where rented home cost is less.
If your family has two vehicles you can think of reducing it to one and opting for public transport or other means of transport. You can save a lot of money on fuel expenses by this step.
You can also look at your mobile plan and think of converting it to a prepaid plan based on actual usage.
Go for cancellation of a subscription such as Prime or Netflix.
Make sure not to go for excessive reduction at a single go. Gradually reduce living expenses and live a frugal lifestyle.
Go for Job Loss Insurance
If you are sure that your job is in danger due to the current financial crisis and your company may give a pink slip to you. Go for Job Loss insurance. Job loss insurance helps you in financial exigencies.
The stand along job loss insurance policy is not available in India. You need to purchase this as add on coverage to other policies. This policy covers EMI expenses. Job loss is not a dependable option as there is a waiting period of one to three months for claim settlement. The coverage offered by the plan is limited.
Few insurance policies that provide coverage to job layoffs are given below.
Safe Loan Shield by Royal Sundaram
Secure Mind by ICICI Lombard
Home Suraksha Plan by HDFC Ergo
Make use of the Emergency Fund
The next step is to make use of an emergency fund. You must have prepared yourself for the bad days by creating an emergency fund. You can make use of an emergency fund.
If you have not yet built an emergency fund it is high time to prepare yourself for the emergency fund. You should build an emergency fund to withstand at least six months of household expenses. Start saving money every month and keeping it aside either in a separate saving bank account or in a fixed deposit.You can help yourself at this time by finding ways to reduce dipping too much into your spare money, so that you are not depleting your finances too fast.
Home warranties are used by many homeowners, so you might want to look into the various ones that are available to ensure you save money. If you own a well pump for instance, you know how bad it can be if it malfunctions, your home needs the flow of water. Taking a look into a well pump warranty will show you how much you can save and get financial support with if your well pump happens to break. You won’t need to dip too far into your funds and you can keep them going for longer.
Look for additional Income
In this adverse time, you also need to look for additional income. You can make use of your skills and hobbies to generate additional income. There are many part time online and offline options for earning additional income. You can also encourage your dependent, like your spouse to contribute.
Another way to increase your income is by leasing your property to someone.
You should also assess your investment portfolio and rebalance it. Make sure your investment should be spread across various investment avenues. If possible, reduce exposure from the equity market as the market is likely to remain volatile in the days to come.
Invest in the fixed deposit with monthly income or other monthly return instruments. It will surely help you to manage your finance in a better way.
Arrange for additional liquidity
The last option to fight job loss or pay cut is to arrange for additional liquidity. Arranging liquidity at this time would be difficult. However, you can think of selling your investment or breaking your fixed deposit if you are facing severe cash issues.
Final Thoughts
Job loss or a pay cut can feel like a financial earthquake, shaking up your stability and sense of security. However, by taking immediate action, reassessing your budget, and planning for the future, you can regain control over your finances. Remember, tough times don’t last, but financially smart people do. Adapt, stay positive, and focus on rebuilding your financial well-being one step at a time.
FAQs
1. How long should my emergency fund last?
Ideally, an emergency fund should cover 3-6 months of essential expenses to help you stay afloat during financial setbacks.
2. What’s the best way to find new job opportunities quickly?
Networking, updating your resume, leveraging LinkedIn, and applying to multiple positions in your industry can help speed up your job search.
3. Should I take out a loan to cover expenses after job loss?
Taking on new debt is risky. Consider alternatives like cutting expenses, seeking temporary work, or government assistance before opting for a loan.
4. How can I negotiate bills during financial hardship?
Call service providers and creditors to request extensions, reduced rates, or flexible payment plans. Many companies offer hardship programs.
5. What side hustles can I start after a pay cut?
Freelancing, online tutoring, rideshare driving, selling handmade goods, or starting a small online business are great side hustle options.
6. Can I pause mortgage or rent payments during financial difficulty?
Some landlords and lenders offer forbearance options. Communicate with them early to explore any available assistance programs.
7. How do I cut my expenses without sacrificing my quality of life?
Focus on needs over wants, cook meals at home, use coupons, cancel unnecessary subscriptions, and find free entertainment options.
8. Should I dip into my retirement savings if I lose my job?
This should be a last resort as withdrawing retirement funds can have penalties and tax implications. Explore all other options first.
9. How can I prepare for potential job loss in the future?
Build an emergency fund, upskill, diversify income sources, network consistently, and keep your resume updated.
10. Is it possible to negotiate a salary after a pay cut?
Yes! Once your company stabilizes financially, you can discuss performance-based raises or promotions to regain your original salary.
In the first instance, you must be thinking that opening an online store is a complex task that requires a lot of money, time and technical knowledge. But, the good news is you can establish a store with little technical knowledge and low investment.
Follow the steps given below to start your online store.
How to open an online store in 2025?
Decide Product Type
Select between drop shipping or holding own products
Select your business name and register domain
Set up a business entity
Find out best ecommerce platform
Set up your online store
Customize online store and add your products
Set up payment methods
Purchase best suitable ecommerce plan
Launch your Store
#1 Decide Product Type
The first thing you need to do before opening online store is deciding a product type. Broadly there are two product types that you can sell commodity product and niche product.
Commodity products are essential household products and electronic items that are required by almost everyone. These are standard items and you are likely to face major competition if you opt for commodity products.
Niche products are customer specific or market specific products. You are likely to face less competition for the niche products.
Make sure to select products that are easy to manage with respect to logistic and drop shipping.
#2 Select between drop shipping or holding own products
The second thing is to decide between drop shipping or holding own products. Drop shipping means managing end to end supply chain. In drop shipping, you need not to keep any goods in stock. Once you receive the order you need to pass this order to distributor or manufacturer. Drop shipping offers following benefits.
Capital Investment required is very low.
You can list more items on your store.
Warehousing cost is NIL.
Less overhead and less manpower required.
Alternatively, you can also go for business model of holding your own product. In this model, you need purchase and store the products at your end. On receiving order, you need to manage packaging and dispatch. Holding your own product is less beneficial and comes with following drawbacks.
You need to manage huge inventory.
Packing and logistic is managed by you.
Investment cost is very high.
For beginner drop shipping is more suitable.
#3 Choosing your business name and registering your domain
The next step is choosing your business name. Here, your business name is your domain name or web address. It is the address of your online store.
Choosing your business name is a crucial step in setting your brand’s tone. Ensure it’s unique, memorable, and relevant to your services. Once decided, register the corresponding .com domain to establish a professional online presence and enhance credibility.
It is very important step while starting an online business. You should select a short and easy-to-remember domain name based on your business. Once you decide domain you need to select an extension. It is advisable to select the .com domain. However, you can also select a .net or .biz extension.
Along with domain name provider, you need to select reliable web hosting provider.
#4 Setup a business entity
You need to setup your business entity. In order to do that you need to separate PAN card and GST number. You may need help from lawyer to complete the paperwork for your business.
You may need to pay deposit for availing GST number.
#5 Find out best e-commerce platform
Now, it’s time to find out best e-commerce platform.
There are many online e-commerce platforms available in the market. Some of them are reliable and economical. However, few are costly.
I have done some research and found out three best and most reliable e-commerce platform for building online store.
Shopify
Wix
Woocommerce
Shopify is one of my favorite e-commerce platform. Creating a store using Shopify is very easy. Shopify is suitable for large online store.
If you want to establish a small store you can go for Wix e-commerce platform. Wix has less sales features compared to Shopify.
Woocommerce is recommended platform if you are from technical background and aware about content management system WordPress.
#6 Set up your online store
In this post, I will share steps to setup your online store using Shopify.
Visit Shopify.com website and sign up with a new account. Enter your email id and click on the “Start Free Trial”. You will be prompted with the password and name of your store. You need to give a unique name to the store. Click on Create Your Store Button.
#7 Customize online store and add your products
On completion of signup process, the system will open the page to set up an online store. Here you need to add product. You need to provide product description, product image, price, quantity, shipping details, tags etc. You can also import all products via an import product option.
Now select the theme and apply to your online store. You can make use of free themes as well as paid themes.
#8 Set up payment methods
Next step is to setup payment method. You can select suitable payment gateway and preferred method of receiving payment.
You can select PayPal, Visa. Amazon, Apple Pay, Credit card as well as other suitable payment method.
Make sure to secure your site via SSL. The payment method comes with fees and charges.
#9 Purchase suitable e-commerce plan for online store
You will get free trial at most of the online ecommerce platform. The trial period varies from 14 days to 30 days.
Once trial period is over you need to purchase suitable ecommerce plan.
You need to pay monthly price for the ecommerce platform. Make sure to check various limits set by ecommerce platform such as product upload limit, product variants limit and option limit before buying.
#10 Launch your Store
Once you are done with setting up your store, you can launch it. You can use various advertising platform as well as e-mail marketing and social channels to launch your store.
Final Words
I have tried my level best to prepare this step by step guide. If you found this guide useful, please share it with you friends who are planning to open an online store.
Converting Credit Card Bill to EMI– Credit Card EMI is one of the most popular methods used nowadays for shopping. You might have seen an option on shopping site to convert your credit card payment to EMI. Converting a credit card bill to EMI means clearing credit card dues by EMI (Loan). You must be aware that there are two options to pay a credit card bill. You can either pay a full bill before the due date or you can pay minimum amount due. If you have difficulty in finding options to pay credit card bill, you can go through the article – 10 Methods to Pay Credit Card Bill Online and Offline. If you clear full fill before the due date you need to pay any interest. However, if you clear only minimum dues you need to pay interest amount.
EMI Conversion for clearing credit card due is another method. This method is used to attract the customer who is unable to pay entire bills on time. It is a convenient and easy option.
How credit card bill to EMI option works?
In credit card EMI option you need to pay little amount every month. This option is similar to other loan EMI. Here you need to pay a portion of principal dues and interest component every month till the full amount is paid.
The option for EMI is available at the time of purchase or at the time of making credit card bill payment. Bank offers this option based on your card and credit behavior. At the first instance, you may find this option very useful as you can save yourself from paying a lot of money at a single go. However, you need to evaluate this option as a whole before opting.
How to convert Credit Card Bill to EMI Option?
The process of converting your credit card bill to EMI is very simple. You can use net banking, SMS or phone banking to avail this facility. Few banks also provide this facility via mobile app. The step by step method to convert credit card bill to EMI in SBI, ICICI is given below.
SBI Credit Card Bill to EMI
Through SBI Net Banking
Login to SBI Net Banking Account.
Under the Benefit Menu click on Flexipay.
Select the transaction which you want to convert to EMI.
Make selection of repayment period and confirm.
Your transaction will be converted to EMI.
Through SMS
You can also use method of SMS to convert your bill to EMI. You need to send SMS “FP” to 56767. You will receive call from SBI executive asking for detail about transaction which you want to convert to EMI. On sharing details your transaction will be converted to EMI.
ICICI Credit Card Bill to EMI
Through ICICI Net Banking
Login to ICICI Net Banking account.
Go to My Account and select credit card option.
Select Convert to EMI option from Menu.
Select credit card detail, EMI tenure and transaction.
On submission your transaction will be converted to EMI.
Through iMobile App
Download iMobile App and Register with your account.
Go to Cards section and select the credit card.
You will be able to see recent transactions.
Select the transaction and click on convert to EMI option.
Provide required detail for conversion.
Points to consider before taking credit card due to EMI option
You should consider following facts before converting your credit card dues to EMI.
Interest rate
The conversion to EMI is not free. You need to pay interest on the due amount. The interest rate range between 12-18% per annum. This rate of interest is lower compared to credit card interest rate which is in the range of 30-40% per annum.
Processing Fees
In order to convert credit card dues to EMI, you need to pay processing fees. The processing fees vary from bank to bank. Few banks do not charge any processing fees for the conversion of a credit card bill to EMI. The processing fees can be negotiated with bank.
Credit Limit Reduction
Once you opt for this facility your credit limit will be reduced by amount which you have opted for converting EMI. Your credit limit will increase by the amount you pay in EMI. Suppose your initial credit limit is Rs.150000 and you have opted for EMI facility for the amount Rs.40000. Your credit limit will be Rs.110000. It will increase every month with payment of EMI amount.
Over to you
Converting credit card bill to EMI is costly option as you need to pay additional interest cost on the goods purchased. It is recommended to use this option only in emergency when you are unable to pay your dues in time.
Do you use this facility? Do share your experience with us.
