Using credit cards abroad will now prove to be costly

[ad_1]

Due to this new rule, it will become more expensive for cardholders to spend on foreign goods or services using credit cards.

As per the new rule that will come into effect from July 1, 20% TCS will be charged from cardholders who use credit cards abroad and pay for goods and services abroad in India.

Not only will the cardholder have to pay higher TCS, but he will be able to make purchases on this card only up to $2.50 lakh per year. The provision of LRS has been implemented from May 16.

The Central Government has amended the Foreign Exchange Management Act (FEMA) rules and international financial transactions through credit cards come under the Liberalized Remittance Scheme.

However, it remains to be seen what kind of mechanism will be employed to enforce the provision of LRS to ascertain how international purchases are made.

Government sources said that taxpayers will be able to claim refund of this TCS at the time of filing returns.

This new decision is likely to increase the travel expenses of Indians traveling abroad. The LRS limit will not be applicable on education or medical expenses on International Credit Cards.

Meanwhile, in the clarification given by the Finance Ministry, it has been said that the expenses incurred through credit cards by the employees who have gone abroad for business work have been kept out of the purview of LRS and TCS.