If you have a credit card, the government has given a big relief, a big benefit for those who spend abroad

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Image Source: Freepik

New delhi date. 29 June 2023 Thursday

Big news is coming out about overseas spending and TCS. This can be fun for those who travel abroad. Now no TCS i.e. Tax at Source will be deducted on foreign expenditure through credit card. The government has released a notification for this. The notification states that payments made abroad through credit cards will not be covered under LRS i.e. Liberalized Remittance Scheme. No TCS will be levied on overseas expenditure up to 7 lakhs per annum.

The Finance Ministry said that no TCS will be payable on any expenditure incurred on foreign tour packages under LRS up to Rs 7 lakh per person per annum. However, higher TCS will be applicable on remittances above 7 lakhs. No TCS will be levied on foreign remittances using credit cards.

The Finance Ministry has extended the TCS rules with effect from July 1. Now the increased TCS has been extended by three months. People will have to pay TCS from October 1 on overseas expenditure of more than 7 lakhs. The new TCS rates will be applicable from October 1.

Exemption will be available on spending through credit card

The Finance Ministry had announced in March that credit card payments will also be brought under LRS but now the Finance Ministry has put its decision on hold. The government has changed this rule and said that international credit card transactions in foreign countries will no longer come under LRS, which means that no tact at source will be levied on these expenses. Now from October 1, 2023, overseas credit card spending will be TCS free.

New TCS rules will be applicable after 3 months

The government was planning to deduct 20% TCS under the LRS scheme on foreign expenditure from July 1 but now annual foreign remittances up to Rs 7 lakh will be TCS free. The government has extended this rule for 3 months which is applicable from July 1. Now the new tax rates will be applicable from October 1. The government has extended this for 3 months by giving a big gift to people traveling abroad. From October 1, people will have to pay 20% TCS instead of 5% on foreign spending.

The government rejected the demand to lower the tax limit

The government has turned down people's demand for a reduction in TCS rates. The government said that there will be no reduction in TCS rate on transactions of any amount of rupees abroad through credit cards. The government has made it clear that 20 percent TCS will be deducted for remittances abroad including foreign tour packages. This new rule will be applicable from October 1.

It is worth mentioning that after implementing this decision of the government, the Ministry of Finance said that the expenditure made abroad with the international credit card has been done to bring it under the LRS (Liberalised Remittance Scheme) of the Reserve Bank of India. The change in FEMA law aims to bring uniformity in the tax-related aspects of debit and credit card remittances.

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