Higher TCS on booking foreign packages on credit card from July 1

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From July 1, 2023, citizens may have to shell out more if they book foreign tour packages using their credit card. Currently, the government levies only 5% Tax Collected at Source (TCS) when citizens use credit card for booking foreign packages. But the government of India has asked the Reserve Bank of India (RBI) to increase TCS from 5% to 20% on foreign remittances made by credit cards.

Citizens are already paying 20% TCS on foreign remittances made by other mode of payment like debit card or net banking. But if the apex bank implements government’s proposal, then, credit card holders will have to shell out more on such transactions.

In Budget 2023, the government has increased the TCS on foreign remittances under the Liberalised Remittance Scheme (LRS) from 5% to 20%. Government has asked the RBI to bring credit card payments made for foreign remittances under the LRS. Once payments made through credit cards are put under the LRS, then, TCS of 20% will be levied instead of 5% on credit cards as well.