Tax on foreign spending via credit card clarified by Ministry
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New Delhi: The government said on Friday that no TCS would be imposed on purchases made abroad with debit or credit cards totalling up to 7 lahks annually.
The Liberalised Remittance Scheme (LRS) and the imposition of Tax Collected at Source (TCS) have drawn criticism from a broad range of people. The Finance Ministry responded by stating that the measure is intended to clear up any procedural uncertainty in these areas.
The ministry's decision earlier this week to bring international credit card spending under the RBI's liberalised remittance scheme (LRS) and the consequent levy of 20 per cent TCS has evoked sharp reactions from experts and stakeholders.
"To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards up to ₹ 7 lahks per financial year will be excluded from the LRS limits and hence, will not attract any TCS," the ministry said in a statement.
Currently, payments of up to ₹ 7 lahks for medical treatment abroad and towards education do not attract TCS. TCS on such expenditures is at the rate of 5 per cent.
Existing beneficial TCS treatment for education and health payments will also continue, the ministry added.
With PTI inputs