“Any payments by an individual using their international Debit or Credit cards upto Rs 7 lakhs per financial year will be excluded from the LRS limits and hence, will not attract any (TCS) Tax Collected at Source,” Government of India stated.
“Existing beneficial TCS treatment for education and health payments will also continue,” GoI added.
The relaxation from TCS has been given only for overseas spending using International Debit or Credit cards if the threshold limit of Rs 7 lakhs per financial year is not breached. This relaxation shall not be available for any remittances made from India. Thus, any remittance for investment, ticket booking, purchase of goods, payment of subscription fees, etc., shall continue to be subject to TCS at 20%.
Concerns have emerged regarding the implementation of Tax Collection at Source (TCS) on small transactions within the Liberalized Remittance Scheme (LRS) starting from July 1, 2023. To address these concerns and eliminate any ambiguity in procedures, the government has made a significant decision.
The ministry’s decision earlier this week to bring international credit card spending under the RBI’s liberalised remittance scheme (LRS) and the consequent levy of 20 per cent TCS has evoked sharp reactions from experts and stakeholders.
“To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards up to Rs 7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS,” the ministry said in a statement.This move aims to streamline the process and facilitate hassle-free transactions for individuals.
The government plans to issue separate amendments to the Foreign Exchange Management (Current Account Transactions Rules), 2000 to accommodate these changes effectively. This decision is expected to provide more clarity and convenience to individuals utilizing the LRS for international transactions.