New Delhi: The government on Friday clarified that any individual making payments using their international debit or credit cards, up to Rs 7 lakhs per financial year, will be exempted from the Liberalized Remittance Scheme (LRS) limits and will not be subject to Tax Collected at Source (TCS). This move aims to streamline the process and facilitate hassle-free transactions for individuals.
"Concerns have been raised about the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalized Remittance Scheme (LRS) from July 1, 2023. To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards upto Rs 7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS.
This move of the government comes after people protested, showing their concerns regarding the implementation of 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.
However, the existing beneficial TCS treatment for education and health payments will also continue. "The necessary changes to the Rules (Foreign Exchange Management (Current Account Transactions Rules), 2000) will be issued separately," an official statement said.
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 per cent.
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.
