TCS Rates: The government said that spending abroad through International Credit Cards will not come under the Liberalized Remittance Scheme. Therefore, there will be no deduction of tax on it.
Finance Ministry on TCS: If you also usually travel abroad and spend there with credit card, then this news is useful for you. The government has given great relief to the credit card users. Earlier there was talk of implementing the new rule from 1st July. Under this, there was a provision to levy TCS fee from July 1, 2023, on credit card spending abroad. Under this, if your spending abroad from credit card is 7 lakh or more, then you will have to pay 20 percent TCS. But now the government has postponed it for three months.
Tax will not be deducted
The government said that spending abroad through International Credit Cards will not come under the Liberalized Remittance Scheme. Therefore, there will be no deduction of tax on it. It has been decided to defer the implementation of Tax Deducted at Source (TCS) at the rate of 20 per cent on remittances from India abroad including travel expenses under LRS for three months. This rule will now come into effect from 1 October.
October 1 rule will be applicable
TCS will not be applicable on credit card expenses abroad from October 1. TCS at the higher rate will be applicable only if the payment under the Liberalized Remittance Scheme is above the limit of Rs 7 lakh. In the Finance Bill 2023, under the Liberalized Remittance Scheme, the government had increased TCS from five percent to 20 percent on sending money from India to any other country except for education and medical, as well as buying foreign travel packages.
Rs 7 lakh limit removed
The limit of Rs 7 lakh was removed for levying TCS under LRS. These amendments were to come into effect from July 1, 2023. The Finance Ministry said, ‘After comments and suggestions received from various parties, it has been decided to make suitable changes. Firstly, it has been decided that there will be no change in the rate of TCS for all purposes under LRS and for foreign travel tour packages with an amount up to Rs 7 lakh per person per annum. Irrespective of the mode in which the payment was made.
“It has also been decided to give more time for implementation of revised TCS rates and inclusion of credit card payments in LRS,” the ministry said. The Finance Ministry said that TCS will be levied at the rate of 5 percent on the expenditure of Rs 7 lakh per person per year for buying foreign travel packages. The rate of 20 percent will be applicable only if the expenditure exceeds this limit.
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