DelhiDesk The Reserve Bank of India (RBI) has included spending in foreign exchange through international credit cards under the liberalized remittance scheme (LRS). The Finance Ministry notified the amended rules under the Foreign Exchange Management Act, which removed Rule 7 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, effectively including forex spending through international credit cards under the LRS. A TCS levy of 5% will come into effect on such transactions till July 1, which would then increase to 20% after July 1. Taxpayers may now have to keep track of these TCS entries in their Form 26AS.
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Here is the news bullets sorted by DelhiBreakings.com team.
– Spending in foreign exchange through international credit cards will be covered under RBI’s liberalized remittance scheme (LRS)
– Finance Ministry notified amended rules under Foreign Exchange Management Act (FEMA) to include credit card spending outside India under LRS
– Rule 7 of Foreign Exchange Management Rules, 2000, which exempted overseas use of international credit cards from prior approval by RBI, has been omitted
– TCS levy of 5% applicable on such transactions till July 1, which will increase to 20% after July 1 (except for medical and education-linked sectors)
– Taxpayers can claim TCS back while filing income tax returns
– LRS scheme allows Indian residents to remit up to $250,000 per year without prior approval from RBI
– TCS rate currently applicable is 5%, but will increase to 20% from July 1, 2023
– Indian travelers booking international travel outside of India will encounter a 20% TCS effective from July 1, 2023
– Travelers can claim TCS credit while filing their tax returns
– The government believes that imposing TCS would help tune and reveal high-cost forex transactions and ensure fair share of taxes
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