No TCS on using credit cards for purchases abroad: Centre

 

No TCS on using credit cards for purchases abroad: Centre

In NEW DELHI: The Liberalised Remittance Scheme (LRS) and Tax Collection at Source (TCS) would not apply to foreign purchases made with international credit cards, according to the finance ministry's announcement on Wednesday.

Additionally, it postponed by three months the imposition of a higher TCS of 20% on international transfers made using LRS, such as for travel expenses.

It stated that the updated TCS will now take effect on October 1, 2023.

However, beginning of October 1, TCS will no longer reward credit card purchases made abroad.

According to a statement from the government, the increased TCS rate will only be used when LRS payments reach the threshold of Rs 7 lakh.

The government eliminated the Rs. 7 lakh threshold for triggering TCS on LRS and raised the rate of TCS via 5% to 20% for transfer under LRS along with for buying of overseas trip programme packages within the Union Budget for the year 2023.

When a transfer is made for a beneficiary's education or medical care, these two adjustments are not relevant. These changes were supposed to go into effect on July 1, 2023.It has been agreed to make the necessary improvements in response to the comments and suggestions. 

First off, it has been determined that the TCS rate would remain the same for all LRS purposes and for international vacation tour packages, independent of the method of payment, for sums up to Rs 7 lakh per person per year.

The integration of credit card payments in LRS and the implementation of the new TCS rates will both receive more time, according to the finance ministry.

The TCS would continue to apply at a rate of 5% for the first Rs 7 lakhs per individual per year when purchasing an international travel programme package; the 20% rate will only be applied for expenditures above this threshold, the ministry noted.