20% TCS on all international transactions done using a credit card

[drdaga]

So if use my credit card for some company spends i will nt be able 2 use this tcs ofset against....so reserve card is of no use after 1st July...jst incase 20% tcs if we get 2x ER then it will be win win situation....

 

[ARV]

Reference/Source: FEMA (Current Account Transactions) Rules, 2000

But this is applicable only for current account transactions and not from personal account. Just checked with my CA, he says they have not received the notification yet. Any CA's please comment

 

[Mohit Dubey]

hey Fino sir could you please tell TCS will be only on credit card?

 

[miles_guy]

Effective from May 16, 2023, all international transactions made using credit cards will now fall under the Liberalized Remittance Scheme (LRS). Furthermore, a 5% Tax Collected at Source (TCS) will be applicable on all international transactions until July 1, 2023.



Currently, a 5% Tax Collected at Source (TCS) will be applicable on transactions exceeding the threshold of Rs. 7 Lakhs in a financial year. This means that if your total spending is below Rs. 7 Lakhs till 1st July, 2023, no TCS will be charged. However, if your spending reaches Rs. 8 Lakhs, the 5% TCS will be applicable only on the amount exceeding Rs. 7 Lakhs, which is Rs. 1 Lakh in this case.

Starting from July 1, 2023, a 20% Tax Collected at Source (TCS) will be applicable on all international transactions conducted using Indian credit cards. Whether you are purchasing a holiday package or indulging in shopping, you will be required to pay a 20% TCS. However, you will have the option to adjust this amount while filing your Income Tax Return (ITR).
Effective immediately, all credit card transactions will be subject to the applicable Liberalized Remittance Scheme (LRS) rules. This means that any total transactions exceeding USD 2.5 lakh or its equivalent in foreign currency will require prior approval from the Reserve Bank of India (RBI).

Furthermore, a 5% Tax Collected at Source (TCS) will be applicable on transactions falling under the medical and education categories, but only for amounts exceeding 7 lakhs. For instance, if you make a payment of Rs. 9 lakhs towards educational institution fees, the 5% TCS will be charged on Rs. 2 lakhs (the amount exceeding 7 lakhs).

Reference/Source: FEMA (Current Account Transactions) Rules, 2000

This means 7 lakhs in the financial year (Apr-Mar), right? Just to be sure...

 

[Karthi52]

This means 7 lakhs in the financial year (Apr-Mar), right? Just to be sure...

that is only until july 1 2023. after that for every single spend, 20% tcs will be charged

 

[Karthi52]

By far the worst thing that can happen to credit cards and travellers. Even for educational or medical purposes, what if i am staying abroad and paying my tenant or restaurant via a card? direct 20% even if u are travelling for medical/ educational issue. take a taxi- 20% wow. take a coffee and pay 20% extra and wait for 9-12 months or even more for a refund lol .people atleast now should realise the value of a Vote

 

[phagocyte536]

This is just plain stupid.

First the increased tax on debt instruments and now this. Shitty taxation

 

[miles_guy]

Daylight robbery as someone put it

 

[vigo]

By far the worst thing that can happen to credit cards and travellers. Even for educational or medical purposes, what if i am staying abroad and paying my tenant or restaurant via a card? direct 20% even if u are travelling for medical/ educational issue. take a taxi- 20% wow. take a coffee and pay 20% extra and wait for 9-12 months or even more for a refund lol .people atleast now should realise the value of a Vote

Exactly. Extremely short term move. They did not even think that many people/businesses use applications and software from overseas for which we have USD based periodic payments and now everything directly becomes 20% extra! Just not ebout retail but huge impact on Businesses.

 

[shuperman]

Does an International Transaction here mean the transaction done in foreign land or done in foreign currency irrespective of the place?
Also the article says "FOREIGN EXCHANGE MANAGEMENT (CURRENT ACCOUNT TRANSACTIONS) RULES, 2000*" Does it really apply to us or only Current account?

 

[CVR]

if we use debit card to withdraw money from atm abroad there will be tcs?

 

[TechnoFino]

https://incometaxindia.gov.in/Documents/Provisions%20for%20NR/provision-for-non-resident-fema-current-account-transactions-rules-2000.htm#:~:text=No%20person%20shall%20draw%20foreign,**%5D%20of%20the%20remitter.

Doesn't seems to be omitted here. Provide Your Source.

 

[Deleted member 9785]

What a joke - https://thewire.in/government/union...-on-offshore-shell-companies-owned-by-indians

 

[Alex292929]

International transaction done using forex card will also attract 20% TCS?

 

[thanix]

International transaction done using forex card will also attract 20% TCS?

They already have if you exceed 7L in FY.

 

[techhdate]

extortion at its finest...allready being extorted by customs and now this..bought some clothing from US for 15k and paid 6k as customs duty

 

[Alex292929]

but now there's no threshold right?

They already have if you exceed 7L in FY.

I have to do 2000 USD transaction in august that means 70 as forex markup + 12.6 as GST + 400 as TCS
= 2482.6 USD
This is crazy

 

[thanix]

but now there's no threshold right?

I have to do 2000 USD transaction in august that means 70 as forex markup + 12.6 as GST + 400 as TCS
= 2482.6 USD
This is crazy

Yes that's the whole issue.

 

[Deleted member 9785]

Yes that's the whole issue.

Going down hill the liberties both in India and world over. Look at the patriot and c11 bill in usa and canada

 

[roshancc]

So in essence, if I wanna make a foreign transaction of Rs 100 after 1st July, my credit card will be debited by Rs. 120, regardless of the category of spend I am making, right?

Also, will this effectively reduce my credit limit by 20% on foreign spends or will banks make adjustments and charge us at statement generation? Who will be providing us the TCS certificates exactly?

Also no more rewards too !