Liberalized Remittance Scheme: People often make various types of payments through Credit Card Payment while traveling. However, now paying with credit cards while traveling abroad is going to be costly. The government is preparing to change the rules regarding such transactions and if this happens, TCS i.e. Tax Collected at Source will be levied on every credit card payment (TCS on Credit Card Payment) made during foreign travel.
The idea of bringing it under the ambit of LRS
Finance Minister Nirmala Sitharaman gave information about this while presenting the Finance Bill 2023 in the Lok Sabha on Friday. He said that it is being considered to bring credit card payments under the ambit of Liberalized Remittance Scheme (LRS) during foreign visits. For this, the Reserve Bank has been asked to look into ways to bring such payments under the ambit of LRS.
Reserve Bank will consider ways
He said, it has been told that credit card payments made during foreign trips do not come under the purview of LRS. In this way, such payments escape tax collection at source. For this reason, the Reserve Bank has been asked to consider ways to bring all such payments under the ambit of LRS and TCS.
The change will be applicable from July 01
Earlier in February, while presenting the general budget, the Finance Minister had proposed to collect TCS at the rate of 20 per cent on the money sent out for work other than education and medical needs. This change is going to be implemented from 01 July. At present, the rate of TCS is 5 per cent if the amount is more than seven lakh rupees, but from July 01, it will increase to 20 per cent.
These proposals made in the budget
Under the LRS in the budget, apart from increasing the TCS from 5 per cent to 20 per cent on sending money outside the country, some proposals have also been made. It has also been proposed to remove the limit of Rs 7 lakh in the budget. At present, TCS is not levied on sending less than Rs 7 lakh, but from July 01, this exemption will not be available and tax will be deducted at the rate of 20 percent on it. However, money sent abroad for medical treatment and studies has been kept out of the tax net. In these cases, if the amount exceeds Rs 07 lakh, tax will be levied as before, ie TCS will be deducted at the rate of 05 percent. In case of education loan, 0.5% TCS will be applicable if the amount exceeds Rs 7 lakh.
LRS came 20 years ago
LRS was first implemented in India in 2004. Then sending payment up to 25 thousand dollars under this was outside the purview of tax. Later, in view of the then economic conditions, changes were made in the limit from time to time.
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