Credit card spending abroad under Government scrutiny

Credit card spending abroad under Government scrutiny again – With the rise in remittances under the Liberalized Remittance Scheme (LRS), spending through international credit cards is prominently on the government’s radar.
However, a decision has yet to be made about the date to bring it under LRS. A top government official confirmed this: “As more and more Indians go abroad, this means spending through cards is also on the rise. Certainly it is on our radar.” Last May, the Finance Ministry issued a notification bringing credit cards under the LRS ambit with 20 per cent tax collection at source (TCS).

Debit cards are already covered under LRS. However, in June last year, it was announced that to give adequate time to banks and card networks to implement requisite IT-based solutions, the government had decided to postpone the implementation of its May 16 notification. This would mean that international credit card transactions, while overseas, would not be counted as LRS and hence would not be subject to TCS. The Press Release dated May 19, 2023, stands superseded, the government said.