RBI LRS Scheme: The government has turned down the demand for reduction in TCS rate. The government has said that there will be no reduction in TCS rate on spending any amount abroad through credit cards.
RBI Liberalized Remittance Scheme: The Finance Ministry has said that no TCS (Tax Collection At Source) will have to be paid on annual foreign remittances up to Rs 7 lakh per year. On this matter, the Finance Ministry has issued a notification saying that no TCS will be payable on foreign tour package expenses paid under LRS per person up to Rs 7 lakh per annum. However, the increased TCS will have to be paid on spending more than this amount.
Earlier this rule was going to be implemented from July 1, 2023. But the government has given a further extension of three months. Now this rule will be applicable from October 1, 2023. While presenting the budget this year, the Finance Minister had announced that under the LRS (Liberalised Remittance Scheme) of RBI, 20 per cent TCS would be charged instead of 5 per cent on foreign remittances. This provision was to be implemented from July 1, which has now been extended to October 1.
However, the government has turned down the demand for reduction in TCS rate. The government has said that there will be no reduction in TCS rate on spending any amount abroad through credit cards. Only the government has postponed the implementation of TCS deduction at the rate of 20 percent for sending money abroad including tour packages for three months i.e. till October 1.
In its reasoning behind implementing this decision, the Finance Ministry had said that the purpose of making changes in the FEMA law was to bring the expenses incurred abroad from international credit cards under the purview of the Reserve Bank of India’s LRS (Liberalised Remittance Scheme). And to bring uniformity in the tax related aspects of the amount sent by credit card.
The Finance Ministry had 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). RBI) has been included in the LRS scheme. This will enable tax collection at source (TCS) to be collected on the amount spent abroad. I can claim credit.
