Govt drops plans to levy TCS on overseas credit card spends
New Delhi, Jun 28: The government on Wednesday dropped plans to levy TCS on overseas payments made through international credit cards and said such expenses will be included in the Liberalised Remittance Scheme (LRS) of the RBI.
The Finance Ministry has also deferred by three months the implementation of a higher Tax Collected at Source (TCS) rate of 20 per cent on expenditures made under LRS and overseas tour packages till September 30. The new rates will come into effect from October 1.
In a statement, the ministry said to give adequate time to banks and card networks to put in place requisite IT-based solutions, the government has decided to postpone the implementation of its May 16, 2023, notification through which credit card expenses were brought under LRS.
The ministry also clarified that "transactions through international credit cards while being overseas would not be counted as LRS and hence would not be subject to TCS".
This means that the government has dropped plans to levy TCS on international credit card spending.
The Budget 2023-24 had raised TCS rates on LRS and foreign tour packages from 5 per cent to 20 per cent, effective July 1.
With Wednesday's announcement of deferment of a higher TCS rate, LRS spending above Rs 7 lakh would attract 20 per cent TCS from October 1.
On the purchase of overseas tour packages, a TCS of 5 per cent will be applicable on payments up to Rs 7 lakh. Above the threshold, 20 per cent would be levied from October 1.
Currently, overseas tour packages and LRS spending above Rs 7 lakh attract 5 per cent TCS.
Also, a TCS of 5 per cent is levied on expenses exceeding Rs 7 lakh towards medical treatment and education.
For those availing loans for overseas education, a lower TCS rate of 0.5 per cent would be levied above the Rs 7 lakh threshold.
"The increase in TCS rates; which were to come into effect from 1st July, 2023 shall now come into effect from 1st October, 2023," the ministry said.
It further said legislative amendments to give effect to changes will be taken up in due course.
The necessary changes to the Rules (Foreign Exchange Management (Current Account Transactions Rules), 2000) will be issued separately. Also, Frequently Asked Questions (FAQs) shall be issued to clarify various practical issues, the ministry added.
Nangia Andersen LLP Partner Sandeep Jhunjhunwala said mentioning the unpreparedness of the IT infrastructure to deal with new TCS provisions on credit card spending, banks and financial institutions had made representations to the government to defer the LRS-TCS implementation timelines.
"Increase of TCS rates on LRS for purposes other than for education and medical treatment had been concerning taxpayers ever since the Finance Bill 2023 was tabled," Jhunjhunwala said.
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India moving towards becoming global economic powerhouse: Kovind
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Amritsar (PTI): Former president Ram Nath Kovind on Friday said that with digital transformation, economic reforms and a strong focus on the ease of doing business, India is moving towards becoming a global economic powerhouse.
He was speaking after inaugurating the 19th edition of the Punjab International Trade Expo (PITEX) in Amritsar.
The former president said that this 19th edition of PITEX is being organised at a time when India is recognised as one of the fastest-growing large economies in the world.
Speaking at the inaugural ceremony of the event organised by the PHD Chamber of Commerce and Industry (PHDCCI) the former president, while referring to Punjab, said the state is a living example of courage, sacrifice and enterprise.
"The spiritual light of Sri Harmandir Sahib (Golden Temple) inspires peace and humanity across the world. The heritage of Punjab is deep and inspiring," Kovind said, according to a statement issued by the PITEX.
The former president congratulated the PHDCCI for hosting the 19th edition of PITEX and suggested that the chamber should expand PITEX outside Punjab.
He proposed that a similar event should also be held in New Delhi.
