20% TCS will have to be paid on international credit card purchases
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Although Neha Sharma can claim credit on TCS but this will affect her cash flow. He said, ‘The holiday season is at its peak in July. I have already paid more for the flights as it is very crowded now. I have selected the Book Now Pay Late option for booking the hotel using my credit card. Many, like Sharma, are confused about how much money they will have to spend on their next foreign trip. The system of 20 per cent TCS on International Credit Cards will start from July 1.
money will be stuck for one year
Travel industry experts say that this move of the government will affect overseas tour packages. Riyaz Munshi, president of the Outbound Tour Operators Association of India (OTOAI), said this would affect foreign travel as tax refunds would take time. People’s funds will be blocked in TCS for one year. This will be difficult for the people. He said that the government is encouraging people to use other channels instead of credit cards. The industry had told the government in March itself that increasing TCS to 20 per cent would increase the difficulties of travelers.
EaseMyTrip co-founder Rikant Pittie said that the new system will increase the cost of people going abroad by 20 per cent. But the good thing is that they can claim the credit while filing the tax return. Ashish Gupta, Consulting CEO of Federation of Associations in Indian Tourism & Hospitality (FAITH), said that any change on foreign-going passengers will also affect the passengers coming into the country. Our tax policies should be inclusive but at the same time demand and supply should also be taken care of. Subhash Goyal, chairman of STIC Travel Group, said that it seems that with such steps the government wants to discourage travel and tourism.
What is the 20% TCS rule on credit cards? Shopping abroad will be expensive
what is change
The Finance Ministry had issued a notification in this regard on Tuesday informing about the amendment in the FEMA Act. After the inclusion of LRS, RBI approval will now be required for remittance of foreign currency worth more than $2.5 lakh. until before
International credit card payments for expenses incurred while traveling abroad did not come under the purview of LRS. In a notification issued by the Finance Ministry in consultation with the RBI, Section 7 of the FEMA Act, 2000 has been omitted. With this, international credit card payments abroad have also come under the ambit of LRS.
The Ministry has released a list of FAQs regarding this. It said debit card payments were already covered under the LRS but credit card expenses abroad did not come under this limit. Due to this many people used to cross the LRS limit. Data obtained from overseas money remittance companies revealed that international credit cards are being issued with spending permissions in excess of the existing LRS limit of $2.50 lakh. According to the ministry, the RBI had also written to the government several times that separate arrangements should be done away with for debit and credit payments abroad.
Chose a new tax slab, yet this saving scheme is of great use, if you stop it, you will have to repent
How will the burden increase in traveling abroad
Suppose you go on a trip to Europe and buy a pack of chewing gum. Its cost is one euro i.e. 90 rupees. You pay for it with a credit card. When you check your transaction at night, you come to know that you have to pay Rs 18 more. This is TCS. Similarly, if you make a credit card payment of Rs 3 lakh abroad, you will have to pay TCS of Rs 60,000. You can claim for it later but your money will be blocked for some time. Indians spent over Rs 90,000 crore abroad between April and February in the financial year 2023. This is 100 percent more than last year. If 20% tax was levied on it, then imagine how huge the amount would have been.
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