Today, on 28th June 2023, the Ministry of Finance released a notification regarding significant changes related to LRS (Liberalized Remittance Scheme) and TCS (Tax Collected at Source).
Earlier, the MOF stated that a new TCS rate of 20% would be applicable to all LRS payments (except education and medical) from 1st July 2023. Additionally, credit card spends were to be included under LRS. However, they later announced that credit cards and debit cards would enjoy a 7 lakh exemption from LRS.
Full details of the previously proposed guidelines: https://www.technofino.in/community...-transactions-done-using-a-credit-card.12514/
Now, the FinMin has made some major changes, which are as follows:
Earlier, the MOF stated that a new TCS rate of 20% would be applicable to all LRS payments (except education and medical) from 1st July 2023. Additionally, credit card spends were to be included under LRS. However, they later announced that credit cards and debit cards would enjoy a 7 lakh exemption from LRS.
Full details of the previously proposed guidelines: https://www.technofino.in/community...-transactions-done-using-a-credit-card.12514/
Now, the FinMin has made some major changes, which are as follows:
- There will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum. The 20% rate will only apply for expenditure above 7 lakh.
- The increased TCS rates will now apply from 1st October 2023 instead of 1st July 2023. That means old TCS rate of 5% will be applicable till 30th September, 2023.
- The implementation of the government's 16th May 2023 e-gazette notification has been postponed. This means that international transactions conducted using credit cards will not fall under LRS, and therefore, no TCS will be applicable.
- Debit cards, forex cards, and all other payment methods for international transactions will enjoy a zero TCS on the first 7 lakh spends or remittance.
