By India Today Business DeskThe central government in consultation with the Reserve Bank of India amended a rule that will attract 20 per cent tax collection at source (TCS) on credit card usage outside India.
This announcement was made through a late-night notification on Tuesday. The finance ministry said in the notification that the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, will include international credit card payments under the Liberalised Remittance Scheme (LRS) from July 1.
The notification said that rule 7 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 has been omitted, which brings the usage of international credit cards towards meeting expenses on a visit outside India under LRS.
It may be noted that the use of credit cards in foreign countries while travelling was not included under the LRS before.
Pushback on social media
While the government’s move is aimed at tracking high-value overseas transactions, the move has not gone down well with people and tax experts, who have voiced their concerns on social media.
A Twitter user named Ajay Rotti tagged Finance Minister Nirmala Sitharaman in a Twitter thread and said“Dear @nsitharaman- TCS on international use of credit cards is not something you should go ahead with. It impacts a lot of business travelers who spend on behalf of the company. It serves no purpose with TCS on the employees name and it can’t be on company name!”
TCS, as proposed, is not a good idea from the perspective of ease of business, he stated, adding that 20 per cent TCS is “too high”.
“And 20% is too high notwithstanding all that I have said above. It is clearly a provision that needs a rethink. The proposal to introduce it needs to be dropped. Overseas payments can’t go unnoticed. Agreed. But please don’t throw the baby with the bath water,” he said.
Kraig Prohaska
Emanuel Schmitt
Ryleigh Mante