TCS for international card spend exempted under RBI's remittance scheme upto Rs 7 lakh
May 19, 2023
New Delhi [India], May 19 : The Ministry of Finance on Friday said it decided that any payments by an individual using their international debit or credit cards upto Rs seven lakh per financial year will be excluded from the RBI's Liberalised Remittance Scheme (LRS) limits and hence, will not attract any Tax Collected at Source (TCS).
The clarification comes after some concerns were raised about the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalized Remittance Scheme (LRS) effective July 1, 2023.
Existing beneficial TCS treatment for education and health payments will also continue.
(TCS) for spending through international credit cards under RBI's
on overseas tour packages and any other remittance (such as for bonds, shares, and real estate gifts) was exempted within the annual limits of USD 250,000.
TCS for these cases, when it crosses USD 250,000 per fiscal, will be now at 20 per cent from July 1, against the earlier 5 per cent.
The Finance Ministry said the changes were necessitated as some instances have come to notice where the
payments were "disproportionately high" when compared to the disclosed incomes.
The new rules under
doesn't change anything except bringing parity between the usage of debit and credit cards abroad.
By bringing TCS on credit card under
, the government aims at plugging the loophole. Earlier, expenditures through credit cards were not accounted for under the specified
limit, which had led to some individuals exceeding the annual limits.
The differential treatment between debit cards and credit cards is sought to be removed through the changes.
Under the
, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April - March) for any permissible current or capital account transaction or a combination of both.
The scheme was introduced on February 4, 2004, with a limit of USD 25,000. The
limit has been revised in stages consistent with prevailing macro and micro economic conditions. There are no restrictions on the frequency of remittances under
.
IT sector workers going on company or business trips will be unaffected by the new provisions that apply largely to the rich for buying property, shares and foreign travel.
The new provisions will not apply on payments for 'education' and 'medical' purposes and do not impact changes in the use of international credit cards by residents while in India.
The Centre on Tuesday brought international credit card spending outside India under the
(
) and issued an explainer on Wednesday to clear any confusion.
