If you frequently go abroad and use your credit card while there, this information will be helpful to you. The use of credit cards has been greatly facilitated by the government. Earlier, it was suggested that the new rule will go into effect on July 1st. A clause in this said that starting on July 1, 2023, TCS fees would be applied to international credit card purchases. According to this, you must pay 20% TCS if your credit card spending abroad is 7,00,000 or higher. However, it has now been delayed for three months by the government.
The tax won’t be subtracted
According to the government, international credit card purchases made overseas will not be covered under the Liberalised Remittance Scheme. There will therefore be no tax deduction for it. The introduction of Tax Deducted at Source (TCS) at the rate of 20% on money transfers from India to other countries, including LRS travel expenses, has been postponed for three months. This regulation will now take effect on October 1st.
The rule will be in effect as of October 1
and as of that day, TCS (TCS) will not apply to credit card expenses made abroad. Only if the payment under the Liberalised Remittance Scheme exceeds the ceiling of Rs 7 lakh will TCS at the higher rate be imposed. The government hiked TCS from 5% to 20% under the Liberalised Remittance Scheme in the Finance Bill 2023 when sending money from India to any other country, with the exception of those for education and healthcare, as well as when purchasing international trip packages.
The Rs. 7 lakh ceiling has been eliminated
For TCS under LRS, the restriction of Rs 7 lakh has been eliminated. The implementation of these changes was set to begin on July 1, 2023. The Finance Ministry declared, “It has been agreed to make appropriate revisions as a result of comments and suggestions received from various parties. First off, it has been determined that the TCS rate will remain unchanged for all LRS-related reasons and for overseas trip tour packages with a maximum annual cost of Rs 7 lakh per person. even if there is no payment at all.
“It has also been decided to give more time for
implementation of revised TCS rates and inclusion of credit card payments in LRS,” the ministry stated. According to the Finance Ministry, TCS will be assessed at a rate of 5% on annual trip package expenditures of Rs 7 lakh per person. Only when the expense exceeds this threshold will the 20% rate be in effect.
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