Credit Card payments on which 20% TCS will apply

Credit Card payments on which 20% TCS will apply 

May 18, 2023

Rajeev Kumar

Using International Credit Card abroad? 20% of the amount will be deducted as (TCS from July 1. Read on to find details of new rule kind of payments that will attract TCS.

But first, the rule: There are two important changes that you should know.

1. Credit card transactions abroad will be subject to the annual LRS limit of $2,50,000 from May 16, 2023. For any expenditure above this limit, you will need prior RBI approval.

2. International credit card transactions will also attract TCS at the rate of 20% from July 1. But no TCS will be collected up to Rs 7 lakh.

Several types of payments done through international credit cards such as air travel, entertainment, hotel booking, food etc are subject to LRS limitations.

Foreign exchange spending  on personal transactions of expenses and gifts with international credit/debit cards is also subject to a ceiling of $2,50,000, as per experts.

20% TCS rule will apply to all the previously mentioned transactions above Rs 7 lakh with international credit cards and debit cards abroad.

20% TCS would also apply to foreign tour packages and purchase of bonds, shares, real estate and gifts abroad. But no TCS up to Rs 7 lakh with credit/debit cards. Also, no 20% TCS on medical treatment and education.

However, taxpayers would be able to claim the tax collected at source (TCS) back at the time of ITR filing.