Expenditure abroad via credit card must be reported to the card issuing institution

Mumbai, dt. 21

The Income Tax Department is considering making it mandatory for credit card holders to disclose details of the type of expenditure incurred in foreign currency to the credit card issuing financial institution. This information will be required for recovery of Tax Collection at Source (TCS).

The Income Tax Department is in discussion with the Reserve Bank and other stakeholders to prepare a special mechanism to find out whether the expenses incurred abroad through credit cards are education or medical expenses.

TCS has been levied at 5% on medical-education expenditure while 20% TCS has been fixed on expenditure made through credit cards for other purposes.

TCS new rates are applicable from 1st July. Sources in the Income Tax Department said that this move is being made as part of giving sufficient time to the taxpayer to provide information.

The tax department is also preparing a special questionnaire for the taxpayer. It has been decided to apply 20% TCS from the next month on spending of more than seven lakh rupees abroad through credit cards.