After backlash over TCS 20% on foreign credit card spends, the government on Friday announced that no tax will be levied on foreign credit card spends. 7 lakh in a year using debit or credit card.
“In order to avoid any procedural ambiguity, it has been decided that any payment by a person using international debit or credit card As far as 7 lakh per financial year will be excluded from the LRS limit and hence, will not attract any TCS,” the ministry said.
What does this mean?
the excess of any payment made in the foreign land 7 lakh per annum through international credit and debit cards will be subject to TCS levy at the rate of 20 per cent with effect from 1 July 2023.
What is TCS on LRS 2023?
At present, overseas medical treatment and education expenses up to 7 lakhs annually is exempt from TCS. A 5% levy is levied on expenditure over Rs. 7 lakhs.
The TCS rate for education loan borrowers is 0.5 per cent.
“The existing beneficial TCS treatment for education and health payments will also continue,” the ministry said.
traveling abroad is about to get expensive
budget 2023 TCS for foreign remittances under LRS has been increased from 5 per cent to 20 per cent (except for education and medical purposes). This rule will be effective from 1 July 2023.
The government earlier this week brought foreign credit card spends under the Liberalized Remittance Scheme (LRS). This means that from July 1 onwards, a 20 per cent tax will be charged on using credit cards abroad. Debit card spends were already part of LRS.
However, the move to levy Tax Collected at Source (TCS) drew criticism. Earlier, BharatPe founder Ashneer Grover in a sarcastic tweet said that there is 20 per cent TCS on foreign travel and foreign credit card spends, but interestingly there is no TCS on political donations where people get IT exemption.
with agency inputs
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