Credit card spend in forex to come under RBI’s remittance scheme
Recently, it was announced by the Finance Ministry that the expenditure incurred abroad with credit card will now be brought under the liberalized remittance scheme.
Key facts:
- This system will be applicable from July 1, 2023. Under this, tax collection (TCS) will now be charged at a source of 20 % on the expenses incurred abroad with credit cards.
- Any payment up to Rs 7 lakh per financial year will be excluded from the LRS limit by a person using his international debit or credit card, so there will be no TCS on it.
- Till now, money transactions with debit card or forex card come under this scheme, now the transactions from credit card have also been included in it.
- However, health and education related expenses will not be included under it.
Liberalized Remittance
- Under the liberalized remittance scheme, all resident individuals, including minors, are allowed to be free from US $ 2,50,000 per financial year (April-March) for a combination of any permissible current or capital account transactions or both.
- Once the amount of up to US $ 2,50,000 once during a financial year is dispatched, a resident person will not be eligible to dispatch anyone under the scheme.
- Any dispatch of more than this limit requires prior permission from RBI.
- The scheme was launched on 4 February 2004 with a border of US $ 25,000.
- In the event of the sender being a minor, the LRS manifesto should be represented by the natural guardian of the mud.
- The scheme is not available for corporates, partnership firms, huf, trusts etc.
Source – PIB
