Overseas spending using credit card won't attract TCS

Payments made by using international credit cards (ICC) during overseas visits will not attract Tax Collected at Source or TCS, as per the latest notification issued by the Finance Ministry. Putting to rest the controversy over usage of International Credit Cards, the ministry further amended the Foreign Exchange Management (Current Account Transactions) Rules, 2000, to exclude International Credit Cards from the purview of the Reserve Bank's Liberalised Remittance Scheme (LRS) which attracts TCS beyond a threshold at specified rates. "...the use of ICC for making payment by a person towards meeting expenses while such person is on a visit outside India" will not be covered under LRS, the notification said while inserting Rule 7 in FEM (CAT) Rules.In a statement on June 28, the ministry had said that "to give adequate time to banks and card networks to put in place requisite IT-based solutions, the government has decided to postpone the implementation of its May 16, 2023, notification".

Transactions through ICCs while "being overseas would not be counted as LRS and hence, would not be subject to TCS", the ministry had said.