Let’s get some key facts straight:
This government does not care about anyone who might be affected by this change.
Simply put, they are already adding a large number of exceptions in place. The uber rich are already exempt. How? Quite simple actually. They will classify their trips as "business" or they can use their foreign bank accounts that they hold. No big deal for them.
Some of rich can get away with fake education/medical portrayals. Most will not have a salary based income hence can claim TCS in a quarter's time rather than the full year+.
The only people that have been hit are again the middle class. The people who are finding it too hard/unsatisfying to travel locally due to the massive tax hike recently on hospitality businesses.
The lower middle or lower income classes are unconcerned by this change entirely and hence the government is unconcerned about the ones who are affected.
We will give a piece of our mind to the government in 2024 or how they are antagonising even educated people, etc.
It really hardly matters. Most financial devices are already under the LRS scheme. The change is for credit cards. There are only 77 million active credit cards in India. I am guessing basically <5% of the population has one. Then out of that very small percentage, very very few will have the means for international travel. Let's put that around 10%. So, essentially 0.5% of the population. That too in the group of people that vote the least 🙂. They are antagonising us because they can easily get away with it.
It is always the salaried MIDDLE class which takes the brunt of any and all new taxes any government introduces.
My thoughts on the change itself is very simple:
Do you like rewards or do you like to spend freely?
If you are unconcerned about the rewards/convenience offered by credit cards then go on your trip and convert money into local currency immediately. That one big transaction will have TCS but then you can go about your trip without having to save each little receipt and worrying about it again and again. Or you could just purchase a ForEx card like the good old days but with a 20% markup 🙂.
Essentially, this is a 20% savings deduction for salaried people every time they take a trip. That savings interest is being gobbled up by the government.
Let's say you had 10L saved up for a big international family trip after 4 years. Rather than having 10L to spend, now you have 8L. However, you cannot even get interest on the 2L you "saved." Your government gets it; so essentially you lose approximately 2L*0.07 ~ 14K in unrealised interest.
This government loves TCS/TDS and then says the economy is not expanding. Uhmmmm, how will it? You have completely crushed the spending power of the middle class. The law abiding middle class might I add.
My suggestion is to not think about it too much. The net loss is small in monetary terms. Approximately, 1.4% (considering 20% TCS and 7% savings interest loss on that) on the total amount of foreign expenditure. This will mean that you just have to plan a bit further ahead when taking that well deserved vacation.
This government does not care about anyone who might be affected by this change.
Simply put, they are already adding a large number of exceptions in place. The uber rich are already exempt. How? Quite simple actually. They will classify their trips as "business" or they can use their foreign bank accounts that they hold. No big deal for them.
Some of rich can get away with fake education/medical portrayals. Most will not have a salary based income hence can claim TCS in a quarter's time rather than the full year+.
The only people that have been hit are again the middle class. The people who are finding it too hard/unsatisfying to travel locally due to the massive tax hike recently on hospitality businesses.
The lower middle or lower income classes are unconcerned by this change entirely and hence the government is unconcerned about the ones who are affected.
We will give a piece of our mind to the government in 2024 or how they are antagonising even educated people, etc.
It really hardly matters. Most financial devices are already under the LRS scheme. The change is for credit cards. There are only 77 million active credit cards in India. I am guessing basically <5% of the population has one. Then out of that very small percentage, very very few will have the means for international travel. Let's put that around 10%. So, essentially 0.5% of the population. That too in the group of people that vote the least 🙂. They are antagonising us because they can easily get away with it.
It is always the salaried MIDDLE class which takes the brunt of any and all new taxes any government introduces.
My thoughts on the change itself is very simple:
Do you like rewards or do you like to spend freely?
If you are unconcerned about the rewards/convenience offered by credit cards then go on your trip and convert money into local currency immediately. That one big transaction will have TCS but then you can go about your trip without having to save each little receipt and worrying about it again and again. Or you could just purchase a ForEx card like the good old days but with a 20% markup 🙂.
Essentially, this is a 20% savings deduction for salaried people every time they take a trip. That savings interest is being gobbled up by the government.
Let's say you had 10L saved up for a big international family trip after 4 years. Rather than having 10L to spend, now you have 8L. However, you cannot even get interest on the 2L you "saved." Your government gets it; so essentially you lose approximately 2L*0.07 ~ 14K in unrealised interest.
This government loves TCS/TDS and then says the economy is not expanding. Uhmmmm, how will it? You have completely crushed the spending power of the middle class. The law abiding middle class might I add.
My suggestion is to not think about it too much. The net loss is small in monetary terms. Approximately, 1.4% (considering 20% TCS and 7% savings interest loss on that) on the total amount of foreign expenditure. This will mean that you just have to plan a bit further ahead when taking that well deserved vacation.
