TCS on credit card payments: The Ministry of Finance informed that the increased Tax Collection at Source (TCS) rates that were to take effect from 1st July 2023, will now be applied from 1st October, 2023. The Ministry further added that transactions through international credit cards, while being overseas, would not be counted as LRS and hence would not be subject to TCS. Previously, it had been decided that 20 per cent TCS on credit card payments or spending abroad.
In the Budget this year, certain changes were announced to the system of Tax Collection at Source (TCS) on payments under the Liberalised Remittance Scheme (LRS) and on overseas tour program packages. It was also announced in March that credit card payments would be brought under the LRS.
The Ministry informed on Wednesday that numerous comments and suggestions were received with regards to the changes in TCS and LRS, which were carefully considered before announcing the suitable changes.
In light of the suggestions received, the official communication from the Ministry said that firstly, it has decided that there will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs 7 lakh per individual per annum.
Furthermore, it has also been decided to give more time for the implementation of the revised TCS rates and for inclusion of TCS on credit card payments in LRS.
As far as the changes are concerned, the Ministry stated in its official release —
“Sub-section (1G) of section 206C of the Income-tax Act, 1961 (“the Act”) provides for Tax Collection at Source (TCS) on (i) foreign remittance through the Liberalised Remittance Scheme (LRS) and (ii) sale of overseas tour program package.