NEW DELHI: The government announced that credit and debit card spending up to Rs 7 lakh in a financial year will not attract the prescribed tax collected at source (TCS), a move that is expected to provide relief to citizens worried about the new rules that kick in from July.
Acknowledging the concerns over the new rules, the finance ministry said that expenditure up to Rs 7 lakh will be excluded from the Liberalised Remittance Scheme. This is in line with the threshold for health and education related remittances and the move on overseas travel is in line with it. “Existing beneficial TCS treatment for education and health payments will also continue,” it said.
The TCS on remittances for medical treatment and education (from personal source) is currently pegged at 5%, while those who have availed of a bank loan for overseas education face a 0.5% TCS.TNN
Card TCS rejig amid criticism
The TCS on some transactions, such as overseas travel, was increased fourfold to 20% as several people did not seek a refund by not filing returns. The government is hoping that higher TCS will force them to seek credit for the tax that has been collected at the time of the transaction.
The government’s latest announcement came amid widespread protests against the decision to implement TCS on payments made by international credit cards for things like overseas travel. Those going on vacation and tour operators are complaining of adverse impact as those availing of a package would have had to cough up the amount upfront and adjust it later, an exercise that could take up to 15 months.
Acknowledging the concerns over the new rules, the finance ministry said that expenditure up to Rs 7 lakh will be excluded from the Liberalised Remittance Scheme. This is in line with the threshold for health and education related remittances and the move on overseas travel is in line with it. “Existing beneficial TCS treatment for education and health payments will also continue,” it said.
The TCS on remittances for medical treatment and education (from personal source) is currently pegged at 5%, while those who have availed of a bank loan for overseas education face a 0.5% TCS.TNN
Card TCS rejig amid criticism
The TCS on some transactions, such as overseas travel, was increased fourfold to 20% as several people did not seek a refund by not filing returns. The government is hoping that higher TCS will force them to seek credit for the tax that has been collected at the time of the transaction.
The government’s latest announcement came amid widespread protests against the decision to implement TCS on payments made by international credit cards for things like overseas travel. Those going on vacation and tour operators are complaining of adverse impact as those availing of a package would have had to cough up the amount upfront and adjust it later, an exercise that could take up to 15 months.
