New Delhi on Friday relaxed the rules that mandated 20 percent Tax Collected At Source (TCS) on international transactions using debit or credit cards. It said that any international transaction done by an individual using his/her debit or credit card upto Rs 7 lakh will not attract the 20 percent levy.
Such transactions, the government has clarified, will be exempt from the $250,000 per annum Liberalised Remittance Scheme (LRS) limits. This relaxation does not extend to international transactions charged to institutional or corporate credit cards.
The government had earlier this week brought overseas credit card spending under the Liberalised Remittance Scheme (LRS).
This meant that any spending using credit cards overseas would attract a 20 per cent tax from July 1. Debit card spending was already part of LRS.
Now, no TCS will be deducted on the spending of up to Rs 7 lakh overseas using any debit or credit card.
Concerns have been raised about the applicability of Tax Collection at Source (TCS) to ‘small transactions’ under the Liberalised 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 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.
