1085139 SIP myths you must know!

There will be no tax collected at source (TCS) on overseas spend by credit or debit cards  up to Rs 7 lakh. The finance ministry issued this clarification on Friday on the recent inclusion of overseas credit or debit card spending in the overall liberalised remittacnce scheme (LRS) of $2,50,000 per financial.

The union budget for 2023-24 had imposed a 20% TCS on foreign remittances or payments. The TCS regimes comes into effect from July 1, 2023.  The statement said “to avoid any procedural ambiguity it has been decided that any payments by an individual using their international debit or credit card up to Rs 7 lakh per financial year will be excluded from the LRS limit and hence will not attract any TCS.” The earlier rule had removed the Rs 7 lakh exemption which meant that any payment would attract TCS.

In an earlier clarificationAdd Image of Thurday, it was said that the spending on corporate cards for business trips would also be excluded from the new TCS rules as these are covered under residual current account transactions outside LRS.

Payments of up to Rs 7 lakh for medical treatment and education do not attract TCS and this will continue.

The imposition of TCS created a lot of confusion among the tour and travel operators. Several of the tour operators have complained to the government that their business would be hit adversely. The fresh guidelines are expected to lead to changes in foreign holiday plans of tourists and also their spending pattern.