TDS on international spends on Credit Cards - What is the best strategy?

[LHR]

Hello everyone,

I am planning to make some major expenses (30-40L+) in a foreign currency in the near future over a year or two. I wanted to ask what the current taxation rules are for credit cards from the POV of TDS.

In the past, I know that if I spent an amount totaling over 7 lakhs from a debit card (one or many) I would have TDS deducted, the same as if I were to remit the money from my bank account. However, I keep seeing that there is no TDS rule yet in effect where there is a set limit on your PAN level. I keep seeing that you can spend as much as you want on a credit card abroad, the only reporting that will happen will be the AIS 10 lakh+ payment received report sent by the bank to the ITD.

Is it possible for me to, let's say, get 3 no/low forex markup credit cards, and spend this amount (9L on each card) across them so that I stay under this 10L reporting limit per card? Is there anything else for me to consider if I want to avoid any reporting to the ITD and have to pay TDS?


Also, if it is possible to avoid TDS by spending across multiple cards, what are some good zero/low forex markup cards? I currently have Yes Marquee which has 1.18% markup and I know AU Ixigo and Scapia are good zero forex options while RBL World Safari is risky as it keeps declining transactions. Any other options for my use case?

 

[Anupama_Jha]

Few corrections
It is TCS that is collected not TDS. There is no TDS under LRS.
There is no category mentioned for this expense. In case of education, medical treatment the tcs rates are different.

Coming to your queries
1. For TCS, the cumulative amount on reporter level will be checked. You are right that bank will not report if it's under 7L on their level. But..

2. Where will you spend? On travel or investments? Where ever you book your package or add money in inr if that amount goes above 2L then that will be reported. Have you seen this option to tick while filing ITR

3. If the spend is for education then rates for TCS go down. For loan based education 0.5% above 7L, for non loan based then 5% above 7L. Only this will be collected by bank

4. If the transaction is on shopping via international sites then remember customs department.

All in all there is very thin space remaining for you to skip TCS or skip ITD.

REGARDING WHICH CARD QUERY - THERE ARE MORE EXPERIENCED PEOPLE ON THIS FORUM

 

[LHR]

Few corrections
It is TCS that is collected not TDS. There is no TDS under LRS.
There is no category mentioned for this expense. In case of education, medical treatment the tcs rates are different.

Coming to your queries
1. For TCS, the cumulative amount on reporter level will be checked. You are right that bank will not report if it's under 7L on their level. But..

2. Where will you spend? On travel or investments? Where ever you book your package or add money in inr if that amount goes above 2L then that will be reported. Have you seen this option to tick while filing ITR
View attachment 99516
3. If the spend is for education then rates for TCS go down. For loan based education 0.5% above 7L, for non loan based then 5% above 7L. Only this will be collected by bank

4. If the transaction is on shopping via international sites then remember customs department.

All in all there is very thin space remaining for you to skip TCS or skip ITD.

REGARDING WHICH CARD QUERY - THERE ARE MORE EXPERIENCED PEOPLE ON THIS FORUM

1. So does that mean if I have 4 cards, and if I spend 6 lakhs on each, I will be fine and there will be no TCS* on my credit cards as I am under the 7/10L limit per bank level?
2. My brother is going abroad for his future studies for the next few years so I wanted to give him my cards and ask him to make spends on that card instead of dealing with the whole foreign remittance thing. The spends will be made in the foreign currency, not at all in INR. He is young so he is not able to get high limit cards on his own, my parents and I can get the limit that will work out for a daily use case for him if this entire thing makes sense.
3. Yes, I understand that part but I do not like the whole foreign remittance kerfuffle along with paying unnecessary fees and exchange rates if it's possible for me to have my brother simply use a credit card and we can pay it off from here.
4. There is no shipping/customs to worry about, just ITD and Nirmala Tai.

What do you think? Is this a good approach for my use case? I was thinking I will get AU IXIGO, Scapia, OneCard and use the existing Yes Marquee to provide a decent limit pool for my brother to use.

 

[Lorddiesel]

As far as I remember, the TCS thing on credit cards was shelved at the last moment, not implemented yet.
If some one has the Gazette notification of the same, they can post it here.
TCS limit is revised to 10 L , but that's for remittance via bank , not for cards.
However, credit cards were under LRS since the beginning, so ur brother can spend $250,000/- per year.

LRS limit is per PAN card, not credit cards, holding different credits with the same PAN , makes no difference.
Foreign spends are reported in the AIS regardless, I know this from my experience ( NRI status )

Try giving him credits attached to different PAN cards for maximum spends

 

[LHR]

As far as I remember, the TCS thing on credit cards was shelved at the last moment, not implemented yet.
If some one has the Gazette notification of the same, they can post it here.
TCS limit is revised to 10 L , but that's for remittance via bank , not for cards.
However, credit cards were under LRS since the beginning, so ur brother can spend $250,000/- per year.

LRS limit is per PAN card, not credit cards, holding different credits with the same PAN , makes no difference.
Foreign spends are reported in the AIS regardless, I know this from my experience ( NRI status )

Try giving him credits attached to different PAN cards for maximum spends

How are foreign spends exactly reported in AIS? If you spend over 10L and pay the bill on a card, I know that banks report that to AIS.