Spend up to ₹7 lakh outside India with your international debit, credit cards without worrying about TCS
2 min read . Updated: 20 May 2023, 08:40 AM IST
PremiumTCS on international debit, credit cards: The government had earlier this week brought overseas credit card spending under Liberalised Remittance Scheme (LRS)
After backlash over 20% TCS on overseas credit card spending, the government on Friday announced that no tax will be charged on overseas spending of up to ₹7 lakh in a year using debit or credit cards.
"To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards up to ₹7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS," the ministry said.
What does this mean?
Any payments done in the foreign land exceeding ₹7 lakh a year through international credit and debit cards will be subject to TCS levy at the rate of 20 per cent effective 1 July 2023.
What is the TCS on LRS 2023?
Currently, overseas medical treatment and education expenses up to ₹7 lakh a year is exempt from TCS. A 5 per cent levy is charged on expenses exceeding ₹7 lakh.
For those who availed of education loans, the rate of TCS is 0.5 per cent.
"Existing beneficial TCS treatment for education and health payments will also continue," the ministry said.
Foreign travel to get costlier
Budget 2023 has increased TCS for foreign remittances under the LRS from 5 per cent to 20 per cent (except for education and medical purposes). This rule will be effective from July 1, 2023.
The government had earlier this week brought overseas credit card spending under 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.
However, the move to levy tax collected at source (TCS) attracted criticism. Earlier BharatPe founder Ashneer Grover in a sarcastic tweet said there is 20 per cent TCS on foreign travel and foreign credit card spend, but interestingly there is no TCS on political donations where people get I-T rebates.
-With agency inputs