The interim budget 2024, presented by Finance Minister Nirmala Sitharaman on February 1, made no mention of bringing international credit card spends under the TCS (tax collected at source) net.
Today, most foreign remittances / spends via debit cards, forex cards, or any other payment mode attract 20 percent TCS once they cross the Rs 7 lakh per person per financial year limit, but those via credit cards are exempt. This is an aggregate limit for all remittances put together per individual per financial year, irrespective of the payment mode.
With the Interim Budget maintaining the status quo, those with foreign currency expenses can continue using their credit cards freely without having to worry about TCS deduction. This keeps the edge that credit cards have over debit cards, forex cards, foreign currency, and other payment modes intact.
For more details on TCS rates, read: TCS of 20% on credit cards put on hold, forex cards get Rs 7-lakh exemption
The TCS story so far
It was in Budget 2023 that the government announced a hike in TCS rates. Foreign remittances made under the RBI's Liberalized Remittance Scheme or LRS and purchase of overseas tour packages then attracted TCS of 5 percent. This rate was to be hiked to 20 percent from July 1, 2023. The implementation date was later postponed to October 1, 2023.
Then in May 2023, international spends using credit cards were brought under the LRS and therefore, under the TCS net for the first time.
Finally, in June 2023, the government rescinded its May 2023 circular and once again, international credit card spends went outside the purview of TCS. This was done to ensure that banks had the necessary infrastructure in place to keep track of such spends.
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