This comes days after the Central government, in consultation with the Reserve Bank of India, amended rules under the Foreign Exchange Management Act, bringing in international credit card spends outside India under the Liberalised Remittance Scheme
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- International credit card payments up to Rs 7 lakh will not attract TCS, clarifies Govt
International credit card payments up to Rs 7 lakh will not attract TCS, clarifies Govt
This comes days after the Central government, in consultation with the Reserve Bank of India, amended rules under the Foreign Exchange Management Act, bringing in international credit card spends outside India under the Liberalised Remittance Scheme.
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By: Express Web DeskNew Delhi | May 19, 2023 19:48 IST
XXThe development came in the backdrop of a surge in spending in overseas travel. (Representational/File)
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The Finance Ministry on Friday clarified that payments using international debit or credit cards up to Rs 7 lakh per financial year will be excluded from the Liberalised Remittance Scheme (LRS) limits and therefore, will not attract any TCS.
This comes days after the Centr ji government, in consultation with the Reserve Bank of India, Tuesday amended rules under the Foreign Exchange Management Act, bringing in international credit card spends outside India under the Liberalised Remittance Scheme. As a result, the spending by international credit cards would attract a higher rate of Tax Collected at Source (TCS) at 20 per cent effective July 1.
The notification brings transactions through credit cards outside India under the ambit of the LRS with immediate effect, which enables the higher levy of TCS, as announced in the Budget for 2022-23, from July 1.
Prior to this, the usage of an international credit card to make payments towards meeting expenses during a trip abroad was not covered under the LRS. The spendings through international credit cards were excluded from LRS by way of Rule 7 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000.The change in rules came in the backdrop of a surge in spending in overseas travel. Indians spent $12.51 billion on overseas travel between April-February of fiscal 2022-23, a rise of 104 per cent compared to the same period of the last year, albeit over a low base due to Covid-linked travel restrictions.Outlining its reasons for the tweaks in rules for international credit card usage, the Finance Ministry Thursday cited instances where “LRS payments are disproportionately high when compared to the disclosed incomes”. Under the LRS scheme, residents are allowed to remit up to $250,000 (approximately Rs 2.06 crore) per year without prior approval from RBI.
