“Concerns have been raised about the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalised Remittance Scheme (LRS) from July 1, 2023. To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international debit or credit cards up to Rs 7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS,” the finance ministry clarified.
Existing beneficial TCS treatment for education and health payments will also continue, read the statement.
The necessary changes to the Rules (Foreign Exchange Management (Current Account Transactions Rules), 2000) will be issued separately.
The ministry’s decision earlier this week to bring international credit card spending under the RBI’s LRS and the consequent levy of 20% TCS had evoked sharp reactions from experts and stakeholders.
(With inputs from agencies)