The Ministry of Finance informed on Wednesday that the increased Tax Collection at Source (TCS) rates that were to take effect from July 01, 2023, will now be applied from October 01, 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 would be imposed on all credit card spending abroad.
In response to the comments and suggestions from several stakeholders, it has been decided to make suitable changes. Firstly, it has been 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 the mode of payment, for amounts up to Rs. 7 lakh per individual per annum. It has also been decided to give more time for the implementation of the revised TCS rates and for the inclusion of credit card payments in LRS.
After discussions with various stakeholders, and taking into account comments and suggestions received, the following decisions have been taken:
- 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 16th May 2023 e-gazette notification. This would mean that transactions through International Credit Cards while being overseas would not be counted as LRS and hence would not be subject to TCS.
- Threshold of Rs. 7 Lakh per financial year per individual in clause (i) of sub-section (1G) of section 206C shall be restored for TCS on all categories of LRS payments, through all modes of payment, regardless of the purpose. Thus, for the first Rs 7 Lakh remittance under LRS, there shall be no TCS. Beyond this Rs 7 Lakh threshold, TCS shall be:
a) 0.5 per cent (if remittance for education is financed by an education loan)
b) 5 per cent (in case of remittance for education/medical treatment);
c) 20 per cent for others.
For purchase of overseas tour program packages under Clause (ii) of Sub-section (1G), the TCS shall continue to apply at the rate of 5 per cent for the first Rs 7 lakhs per individual per annum; the 20 per cent rate will only apply for expenditure above this limit.
3. Increased TCS rates to apply from October 01, 2023: The increase in TCS rates; which were to come into effect from July 01, 2023, shall now come into effect from October 01, 2023 with the modification as in (ii) above. Till September 30, 2023, earlier rates (prior to amendment by the Finance Act 2023) shall continue to apply.
 rates that were to take effect from July 01, 2023, will now be applied from October 01, 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 would be imposed on all credit card spending abroad.){kind=link}