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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Congress and INDIA bloc will come to power and govern country: DK Shivakumar
Bengaluru, May 12: Karnataka Deputy Chief Minister D K Shivakumar on Sunday asserted that his party along with the INDIA bloc will come to power and govern the country in the days ahead, after the ongoing Lok Sabha polls.
The state Congress chief also said that he and his party are not bothered by the BJP-JD(S) alliance continuing for the biennial election to six seats (three each from graduates' and teachers' constituencies) of the Karnataka Legislative Council on June 3.
"In my opinion, Congress party and the INDI Alliance will come to power. There is no chance for a BJP person to become the prime minister. This country will be governed under the leadership of the Congress party and the INDI Alliance hereon, we have that much confidence," Shivakumar said after a party meeting here.
He was responding to a question on AAP chief and Delhi Chief Minister Arvind Kejriwal's comments asking the BJP as to who will be its next prime minister as Narendra Modi will have to retire next year as he attains 75 years of age.
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Meeting of party leaders and office bearers were held today regarding Legislative Council polls to elect members from graduates and teachers constituencies. Directions have been given to everyone to actively participate in this election without leaving it on the candidates, and responsibilities have been fixed, Shivakumar said.
Instructions have been given to hold the MLC polls too unitedly, like it was done in the case of Assembly and Parliament polls, he said.
Asked about the JD(S) and BJP alliance continuing in the MLC polls too, the KPCC chief said, "Let them be together permanently, we don't have any objections. Let them do anything, we are not bothered."
The party today announced former MLC Marithibbe Gowda, who quit JD(S) recently, as the party's candidate from the South Teachers' Constituency.
The Congress had already announced candidates to other five segments: Ramoji Gowda (Bengaluru Graduates'), Chandrashekara B Patil (North East Graduates'), Ayanur Manjunath (South-West Graduates'), K K Manjunath (South West Teachers'), and D T Srinivas (South East Teachers').
