International payments made using your credit cards overseas will not attract 20 percent tax collected at source( TCS ) for now, the finance ministry has said in a recent notification, rescinding its May circular that brought credit cards under the liberalised remittance scheme ( LRS ).
Earlier, a higher TCS rate of 20 percent, off from the recent 5 cent, was to come into effect from July 1, 2023. This was introduced in Budget 2023. This will now be implemented from October 1. ( See the details in the table )
By bringing all forms of payment under the TCS deduction threshold of Rs 7 lakh, the government has also given some relief to those traveling abroad with foreign currency and forex cards.
Ankur Mittal, Co - Founder, Cardinsider, a credit card comparison website, says, In the case of credit cards, it is obvious that they will not be content to TCS until the lenders are prepared with the necessary equipment. Thus, October 1, 2023, is never related for credit cards at the moment."
There has been much confusion and uproar since the government brought foreign credit card payments when outside India under TCS from May 16. All of these international credit card transactions were initially categorized under the TCS web. Finally, on May 19, the authorities introduced a per season threshold of Rs 7 lakh– TCS may apply just beyond this limit. This has now been put off until the necessary equipment is in place to monitor such expenditures.
Since the doorway was introduced, guesswork has been rife that people may use their credit cards with various lenders to get around this limit. Banking and taxation experts that Moneycontrol had spoken with then had evinced mixed views on whether this limit would apply at the level of each bank or permanent account number( PAN ). This has now been put to rest.
" The authorities press release has clarified that the exemption threshold limit of Rs 7 lakh is valid per specific remitter and never per authorized dealer or per usage or per mode of remittance," says Mayank Mohanka, Founder, TaxAaram.com and Managing Partner, S M Mohanka & Associates. TaxAaram.com is an electronic - software solution for all money duty planning and compliance.
Ankur Mittal, Co - Founder, Cardinsider, a credit card comparison website, says, In the case of credit cards, it is obvious that they will not be content to TCS until the lenders are prepared with the necessary equipment. Thus, October 1, 2023, is never related for credit cards at the moment."
Several credit cards
There has been much confusion and uproar since the government brought foreign credit card payments when outside India under TCS from May 16. All of these international credit card transactions were initially categorized under the TCS web. Finally, on May 19, the authorities introduced a per season threshold of Rs 7 lakh– TCS may apply just beyond this limit. This has now been put off until the necessary equipment is in place to monitor such expenditures.
Since the doorway was introduced, guesswork has been rife that people may use their credit cards with various lenders to get around this limit. Banking and taxation experts that Moneycontrol had spoken with then had evinced mixed views on whether this limit would apply at the level of each bank or permanent account number( PAN ). This has now been put to rest.
" The authorities press release has clarified that the exemption threshold limit of Rs 7 lakh is valid per specific remitter and never per authorized dealer or per usage or per mode of remittance," says Mayank Mohanka, Founder, TaxAaram.com and Managing Partner, S M Mohanka & Associates. TaxAaram.com is an electronic - software solution for all money duty planning and compliance.
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