20% TCS on all international transactions done using a credit card

[Dr-green69]

Effective from May 16, 2023, all international transactions made using credit cards will now fall under the Liberalized Remittance Scheme (LRS). Furthermore, a 5% Tax Collected at Source (TCS) will be applicable on all international transactions until July 1, 2023.

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Currently, a 5% Tax Collected at Source (TCS) will be applicable on transactions exceeding the threshold of Rs. 7 Lakhs in a financial year. This means that if your total spending is below Rs. 7 Lakhs till 1st July, 2023, no TCS will be charged. However, if your spending reaches Rs. 8 Lakhs, the 5% TCS will be applicable only on the amount exceeding Rs. 7 Lakhs, which is Rs. 1 Lakh in this case.

Starting from July 1, 2023, a 20% Tax Collected at Source (TCS) will be applicable on all international transactions conducted using Indian credit cards. Whether you are purchasing a holiday package or indulging in shopping, you will be required to pay a 20% TCS. However, you will have the option to adjust this amount while filing your Income Tax Return (ITR).
Effective immediately, all credit card transactions will be subject to the applicable Liberalized Remittance Scheme (LRS) rules. This means that any total transactions exceeding USD 2.5 lakh or its equivalent in foreign currency will require prior approval from the Reserve Bank of India (RBI).

Furthermore, a 5% Tax Collected at Source (TCS) will be applicable on transactions falling under the medical and education categories, but only for amounts exceeding 7 lakhs. For instance, if you make a payment of Rs. 9 lakhs towards educational institution fees, the 5% TCS will be charged on Rs. 2 lakhs (the amount exceeding 7 lakhs).

Reference/Source: FEMA (Current Account Transactions) Rules, 2000

Ill be paying visa fees of 2 person approx 55000rs per person around 20june and i was thinking of using magnus cc for monthly milestone so do i have to pay 20% on that??

 

[thanix]

Ill be paying visa fees of 2 person approx 55000rs per person around 20june and i was thinking of using magnus cc for monthly milestone so do i have to pay 20% on that??

No, this is not international transaction. Which visa is this? VFS does not accept cards for visa fees for Schengen from my experience.

 

[vigo]

Absolutely stupidity! Taxing forex spending is reducing disposable income as those who have to travel, will still do and then reduce their spending in India and overseas as their money is stuck with the govt!

 

[TechnoFinoTechnoFino is verified member.]

My company is listed on Nasdaq, I buy share of my org and the amount is deducted through my salary. Will TCS be deducted in this case?

No TCS in this case as you are not transferring money from your account to US

 

[vigo]

No TCS in this case as you are not transferring money from your account to US

This will encourage people like this guy to keep his money in USD rather than bring it to India and convert to INR, negatively affecting INR.

 

[TechnoFinoTechnoFino is verified member.]

And I am guessing addon members’ spend will be counted against primary holder’s PAN. Will that be the case?

Yes

That link literally claims the opposite of what this post says.

It shows the Point 7 still being there.

read the rule 7 again

 

[vishalm]

I have corporate credit card issued on company pan card and my name for office uses. Using that card if we make foreign purchases, for that also do we need to pay TCS? and hopefully it does not effect personal it returns ?

 

[Dr-green69]

No, this is not international transaction. Which visa is this? VFS does not accept cards for visa fees for Schengen from my experience.

UK visa

 

[TechnoFinoTechnoFino is verified member.]

I have corporate credit card issued on company pan card and my name for office uses. Using that card if we make foreign purchases, for that also do we need to pay TCS? and hopefully it does not effect personal it returns ?

TCS will be applicable on all cards, if the card was issued on your company's pan then it will not affect your personal ITR

 

[Deleted member 13981]

Does it means that for every pound spent on my indian card I'll have to pay 100 + Mark-up fee + GST + 20% TCS on top (assuming 1 GBP = 100 INR)?

 

[TechnoFinoTechnoFino is verified member.]

It means for every pound spent on my indian card I'll have to pay 100 + Mark-up + GST + 20% TCS on top (assuming 1 GBP = 100 INR).

Absolutely 💯 from 1st July, 2023

 

[vinrey287]

Cards like world Safari would be of no use from July 1st.

 

[anirban.choudhuryanirban.choudhury is verified member.]

My company is listed on Nasdaq, I buy share of my org and the amount is deducted through my salary. Will TCS be deducted in this case?

I guess you are mentioning RSU here , the payment is actually made by your company in local currency and equivalent amount is deducted from your salary .
Hence no tcs in this case

 

[anirban.choudhuryanirban.choudhury is verified member.]

Cards like world Safari would be of no use from July 1st.

Why is that ?
You would still save on markup

 

[vinrey287]

Why is that ?
You would still save on markup

I would stay away from foreign spending with cc and deal in cash as much as possible.

 

[Deleted member 13981]

Absolutely 💯 from 1st July, 2023

Thanks.. I have a question. How will it affect reward point and monthly milestone calculation? Do I have to manually deduct TCS from the debit amount and adjust my spends to achieve them?

 

[dungeonMaster]

I guess you are mentioning RSU here , the payment is actually made by your company in local currency and equivalent amount is deducted from your salary .
Hence no tcs in this case

Different from RSU, its actually ESPP (Employee Stock Purchase Programme). Deductions are made from salary In this case.

 

[biriyani]

Yes

read the rule 7 again

Rule 7 was there earlier and it continues to have the same wordings right. Can you please explain what's changed now?

 

[anirban.choudhuryanirban.choudhury is verified member.]

Different from RSU, its actually ESPP (Employee Stock Purchase Programme). Deductions are made from salary In this case.

If there is a outward remittance involved you will be charged 20% tcs
But most likely ESPP or ESOP are managed by companies so you don’t need to pay the 20% tcs.

 

[anirban.choudhuryanirban.choudhury is verified member.]

I think someone having a high rewarding card , now should be using their cards more
For forex transactions .
Say for reserve , you get 2x on that 20% and then you claim it as advanced tax or during ITR
What’s the loss in that infact you earned 2x for nothing 😀