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Finance Ministry said, changed rules to bring parity in debit credit cards on spending abroad

RBI Liberalized Remittance Scheme: The Finance Ministry has said that the purpose of changing the FEMA law to bring the expenses made abroad from international credit cards under the purview of the Reserve Bank of India’s LRS (Liberalised Remittance Scheme)) Debit and credit card amount sent tax. To bring equality in the aspects related to

The Finance Ministry said in its statement that through the Foreign Exchange Management (FEMA) Amendment Rules, 2023 (Foreign Exchange Management (Current Account Transactions) (Amendment) Rules 2023, the expenditure incurred abroad through credit cards will also be regulated by the Reserve Bank of India (RBI). ) has been included in the LRS scheme. This will enable tax collection at source ie TCS to be recovered at the applicable rates on the amount spent abroad. If the person paying TCS is a taxpayer, he can set off his income tax or advance tax liabilities. may claim a credit or adjustment.

In the budget presented for 2023-24 this year, the TCS rate on foreign tour packages and money sent abroad under LRS was increased from 5 per cent to 20 per cent. The new tax rate is going to be implemented from July 1, 2023. The ministry has already issued a notification regarding this. After inclusion of LRS in the notification, any remittance of foreign currency above Rs 2.5 lakh will require RBI approval. Earlier, international credit card payments for expenses incurred while traveling abroad did not come under the purview of LRS.

The ministry has tried to clarify the situation by releasing a list of related questions and their answers on this change. It said that debit card payments were already covered under LRS but expenses made abroad from credit cards did not come under this limit. Due to this many people used to cross the LRS limit.

Data obtained from overseas remittance companies revealed that international credit cards are being issued with spending permissions in excess of the existing LRS limit of Rs 2.50 lakh. The RBI had written several letters to the government that the differential treatment of foreign debit and credit payments should be done away with.

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