A remittance tax

Compliance burden should not be increased

A provision in the Union Budget for 2020-21 that is attracting considerable adverse attention deals with remittances abroad. The Budget proposes that if a person remits more than Rs 7 lakh overseas under the Reserve Bank of India’s (RBI’s) Liberalised Remittance Scheme (LRS) — or buys an overseas tour package of that amount from a travel agent — then the bank or agent in question would have to pass on 5 per cent of that amount as tax. The government says this does not count as double taxation although it is on income that is already taxed, because individuals can