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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JD(S) wants changes in certain provisions in One Nation-One Election proposal
Bengaluru (PTI): The JD(S) has requested its ally BJP to make changes in certain provisions of the proposed 129th Constitutional Amendment Bill linked to the ONOE proposal, particularly the special powers proposed to be given to the ECI to recommend postponement of elections in any state.
The Parliamentary Joint Committee held discussions with political parties in Bengaluru on Saturday regarding the Constitution Amendment Bill connected to 'One Nation-One Election' and sought their suggestions and opinions.
The JD(S) said suitable amendments had been proposed to the provisions empowering the Election Commission of India to recommend to the President the deferment of state elections, while also seeking legal safeguards for the stability of coalition governments and protection for regional parties during simultaneous elections.
"With regard to the Bill, the JD(S) extended support to the Constitutional amendment with certain conditions and amendments, while suggesting safeguards to ensure that regional parties are not adversely affected by the aggressive election campaigns of national parties during simultaneous elections," the statement said.
The party stated that coalition governments have been formed and functioning at both the state and national levels for several decades in recent years, and "there is a need for legal protection to ensure their stability".
"Therefore, it also suggested incorporating legal safeguards for the stability of coalition governments in the proposed Constitutional amendment," the party, headed by former Prime Minister H D Deve Gowda, said.
The proposed Constitutional amendment grants special powers to the ECI to recommend to the President the postponement of elections in any state. Suitable amendments to these special powers have been proposed, the party said.
"On the above stated subjects, suitable submissions were made to the JPC," the party said in a statement, which has been posted on its 'X' handle.
According to the statement, the JD(S) delegation was led by M Mallesh Babu and included former MP D Kupendra Reddy, former Assembly Deputy Speaker M Krishna Reddy, former minister Venkatrao Nadagouda, MLA T N Javarayi Gowda, former MLA K A Tippeswamy and party legal cell president A P Ranganath.
