An Indian rupee note is seen in this illustration. File
| Photo Credit: REUTERS
In another bid to address the persistent doubts over the applicability of the new 20% tax levy on overseas spends from July 1, the government will soon issue a fresh clarification to quell the concerns that have not been resolved by earlier communiques on the matter, a Finance Ministry official said on Friday.
The Union Budget had hiked the tax collection at source (TCS) rate from 5% to 20% on overseas tour packages and outflows under the Liberalised Remittance Scheme (LRS) that permits $2.5 lakh dollars a year to be sent abroad. Subsequently, the government included overseas credit card spends in the LRS’ ambit, enabling a 20% TCS levy on all such spending abroad.
Facing an outcry from industry and taxpayers on the steep levy, the Finance Ministry had issued detailed clarifications on the issue in mid-May and defended the move, before deciding to tweak the provisions somewhat by exempting credit and debit card spends of up to ₹7 lakh a year from the TCS requirement.
“Everybody is aware of the issue and we are certainly going to come up with some clarification or FAQs [Frequently Asked Questions] on that and that will clarify the position beyond any reasonable doubt on what and how and in what manner the TCS will be implemented and to what extent a threshold is available on which it is not to be collected,” said Raman Chopra, joint secretary in the Department of Revenue.
Stressing there has been a lot of discussion in the ministry on the issue, including with Finance Minister Nirmala Sitharaman and the Chief Economic Advisor V. Anantha Nageswaran, Mr. Chopra assured that the matter is going to be clarified “soon”.
“At this point of time, I cannot share with you what is to be clarified and to what extent it is to be clarified but it shall be done,” he said at a Confederation of Indian Industry event in response to a query about how the government will distinguish personal spends from corporate expenses when employees travel abroad for work.
The ministry had earlier said that bona fide business visits overseas by employees won’t be affected by the TCS levy.