Home News Travel Traveling abroad? Know THIS extra cost before swiping your credit card. TCS on forex transactions, tax on credit cards from THIS date – Details

Traveling abroad? Know THIS extra cost before swiping your credit card. TCS on forex transactions, tax on credit cards from THIS date – Details

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Traveling abroad?  Know THIS extra cost before swiping your credit card.  TCS on forex transactions, tax on credit cards from THIS date – Details

Speaking in Lok Sabha, Finance Minister Nirmala Sitharaman had said that payments through credit cards were not being captured under the LRS

Speaking in Lok Sabha, Finance Minister Nirmala Sitharaman had said that payments through credit cards were not being captured under the LRS.

New Delhi: In line with Finance Minister Nirmala Sitharaman’s Budget 2023 speech, overseas travelers will have to spend extra for spending on credit cards during foreign travels from July 1, 2023, Economic Times reported. Budget 2023 raised the tax collected at source (TCS) from five per cent to 20 per cent under the Liberalized Remittance Scheme (LRS).
Speaking in Lok Sabha in February, Finance Minister Nirmala Sitharaman had noted that payments through credit cards were not being captured under the LRS. She had also said that the Reserve Bank of India (RBI) was asked to take steps to bring such credit card payments under the ambit of LRS.

“It has been represented that payments for foreign tours through a credit card are not being captured under the Liberalized Remittance Scheme (LRS) and such payments escape tax collection at source (TCS)… The RBI is being requested to look into this to bring credit card payments for foreign tours within the ambit of LRS and tax collection at source thereon,” she had said.

TCS on credit cards: What does this mean for people traveling overseas?

For foreign travelers, this may mean shelling out an additional Rs 20,000 for every Rs 1,00,000 spent on their credit cards.

TCS on foreign transactions: Are debit cards and bank transfers exempted from tax on foreign land?

It may be noted that expenditures on debit cards or bank transfers are already under the ambit of LRS and attract 20 per cent TCS. The move is aimed at bringing a larger number of transactions under the tax umbrella.

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