The new rules for the use of international credit cards have been changed after the central government issued a late-night notification on Tuesday (May 16), under the Foreign Exchange Management Act, bringing it under the Liberalised Remittance Scheme (LRS). As a result of the move, spending the international credit card will also end up attracting a higher rate of Tax Collected as Source (TCS) at 20 percent, which will come into effect from July 1. The decision has been taken in consultation with the Reserve Bank of India. This could end up having a significant compliance burden for card-issuing banks and for customers as well. Notably, this is going to be a big change for foreign travellers as the present TCS is 5 percent. The TCS rate at 5 percent will continue till June 30 and the new rate of 20 percent will come into effect from July 1, 2023. However, the use of credit cards by Indian users at foreign visits has come under the ambit of LRS effective May 16, 2023.Earlier, the information was shared by finance minister Nirmala Sitharaman while presenting the Union budget 2023.The change, according to the studies, coincides with an increase in spending on international travel. Between April and February of fiscal 2022–23, Indians spent $12.51 billion on international travel, an increase of 104% over the same period in the previous year. It has been made clear, though, that the modifications would not be made to payments for purchasing foreign goods or services from India, such as subscriptions to newspapers, magazines, or online streaming services.Ashneer Grover takes dig at new TCSTaking a dig at the new rule, Grover said that TCS (Tax Collected at Source) rules will never apply to political donations. He added that political donations in India enjoy income tax exemptions. Taking it to Twitter, Ashneer Grover said, “20 per cent TCS on foreign travel, 20 per cent TCS on foreign credit card spend, and the LRS limit is an interesting rule. It is interesting to note that political donations never attract TCS of any kind. These individuals and companies get a tax rebate,” Grover said on Thursday. (Foreign travel pe 20% TCS foreign credit card spend pe 20% TCS and LRS limit me Lana bahut hi interesting rule hai. Haan political donations pe kabhi TCS nahi lagne waala – yeh tay hai ! Wahaan aapko ulta income tax mein rebate milegi.”) Foreign travel pe 20% TCS foreign credit card spend pe 20% TCS and LRS limit me lana bahut hi interesting rule hai. Haan political donations pe kabhi TCS nahi lagne waala – yeh tay hai ! Wahaan aapko ulta income tax mein rebate milegi.https://t.co/xvIptzEp5z— Ashneer Grover (@Ashneer_Grover) May 18, 2023
