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

[caabhi]

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.

#FEMA 2000 rule no 5 & 7:

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# official Gazette of GOI, department of economic affairs: notified rule 7 (of FEMA 2000) has been omitted

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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

Thank you for sharing the details!

My understanding for ease of reference for other members:-
The notification referred in this post said that rule 7 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 has been omitted, which brings the usage of international credit cards towards meeting expenses on a visit outside India under LRS.

The notification brings transactions through credit cards outside India under the ambit of the LRS with immediate effect, which enables the higher levy of TCS, as announced in the Budget for 2022-23, from July 1.

It may be noted that the use of credit cards in foreign countries while travelling was not included under the LRS before. It earlier included debit card, forex card and bank transfers.

 

[tdot]

Is this going live from July this year ? My understanding was it’s a proposal and still under discussion but seems like it’s now set in motion already

 

[vinrey287]

What happens if an NRI uses Indian card in foreign currency? Will there be any option for refund?

 

[roshancc]

Real reason is only 73 Milli out of 1.4 Billi have CC , 73 Milli is tiny so they don't care about us 😂
Best thing to do is to Implement 20% post a threshold of 50K or 1L Per Annum I think that would do for 90% of the folks 😀

 

[Dragon_slayer]

Every day this government comes up with stupid laws to make lives of middle class more difficult. 👎

 

[CVR]

if we use debit card to withdraw money from atm abroad there will be tcs?

can anyone confirm? thanks
@TechnoFino

 

[ccdc]

I was expecting regular ITR filers get 5% and only non filers will be slapped with 20% to catch them.

The government is drunk with arrogance and I will use my voter ID card rather than my credit card to get even

Lol...how do you differentiate between non itr filers and itr filers when you make a transaction outside India...

 

[insanegenius]

>Lol...how do you differentiate between non itr filers and itr filers when you make a transaction outside India...

You can get a credit card without PAN and Aadhaar?

 

[miles_guy]

can anyone confirm? thanks

Yes, definitely

 

[ccdc]

By far the worst thing that can happen to credit cards and travellers. Even for educational or medical purposes, what if i am staying abroad and paying my tenant or restaurant via a card? direct 20% even if u are travelling for medical/ educational issue. take a taxi- 20% wow. take a coffee and pay 20% extra and wait for 9-12 months or even more for a refund lol .people atleast now should realise the value of a Vote

This is done coz there are so many PPL travelling outside India and spending lakhs there and here they declare 0 income or negligible income... Why should salary class pay taxes on time.. let the other Indians also pay taxes and then you can file itr and claim back.

 

[phagocyte536]

This is done coz there are so many PPL travelling outside India and spending lakhs there and here they declare 0 income or negligible income... Why should salary class pay taxes on time.. let the other Indians also pay taxes and then you can file itr and claim back.

I don't mind getting back, it's just that on a 5lakh europe trip, I'll have 1lakh extra stuck with government and government will enjoy these funds for an year or even more interest free.

 

[ccdc]

What a joke - https://thewire.in/government/union...-on-offshore-shell-companies-owned-by-indians

This news website is totally shady... Many times published fake news... Don't read this news site... Will give false news or fake news.

 

[ccdc]

Just some bureaucrats trying to please their boss by coming up with some new idea (not necessarily beneficial for society).

N-Sitharaman is the worst finance minister I've seen. She ruined all the good deeds done by sir Arun Jaitley under BJP.

Probably she should announce cc to bank scheme... 100cr per month... Govt will employ cc to bank abusers and pay them monthly salary and abuse various apps and wallets...

 

[roshancc]

This is done coz there are so many PPL travelling outside India and spending lakhs there and here they declare 0 income or negligible income... Why should salary class pay taxes on time.. let the other Indians also pay taxes and then you can file itr and claim back.

Great Intention but bad implementation they should simply put a small threshold like 50K per annum in Forex via CC above which implement 20% . Classifying everyone who has a CC as shady is the part I don't agree with .

 

[ccdc]

>Lol...how do you differentiate between non itr filers and itr filers when you make a transaction outside India...

You can get a credit card without PAN and Aadhaar?

there are crores of ppl who have pan but dont file itr...man..just use some if you have some...ok...

I don't mind getting back, it's just that on a 5lakh europe trip, I'll have 1lakh extra stuck with government and government will enjoy these funds for an year or even more interest free.

you can pay less tds or advance tax on your other income....you save money that way....

 

[phagocyte536]

there are crores of ppl who have pan but dont file itr...man..just use some if you have some...ok...

you can pay less tds or advance tax on your other income....you save money that way....

How can i do that? My employer pays on my behalf

 

[ccdc]

How can i do that? My employer pays on my behalf

pay less advance tax on your other income...😛

 

[pingtime]

How can i do that? My employer pays on my behalf

As a salaried class, expect to get shafted, always! 🤣

 

[sloth2805]

I guess this means the end of NRI+Reserve dream run

 

[Chaitanya-a]

Probably she should announce cc to bank scheme... 100cr per month... Govt will employ cc to bank abusers and pay them monthly salary and abuse various apps and wallets...

Lol. You're defending someone who said auto sector is slumping bcz of Ola, Uber