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The Union Finance Ministry has said in a clarification that the Liberalized Remittance Scheme (LRS) rules will not apply to foreign business trips of company-sponsored employees. The Finance Ministry has given clarification regarding the questions being asked continuously. It states that when an employee has been deputed abroad by the company and the company is bearing all expenses, these expenses will be treated as residual currency account transactions outside LRS and will be reimbursed to the authorized dealer without any limit. may be approved.
Under the LRS, all local residents are allowed to send up to $2.5 million in a financial year. A total amount of $ 19.61 billion was sent under LRS in the financial year 2021-22. This was higher than the $12.68 billion seen in 2020-21. A total of $24 billion was sent in the financial year 2022-23. Of which more than 50 per cent was foreign travel. The Finance Ministry on Wednesday announced the inclusion of international credit card transactions under LRS in a notification regarding the budget provision for 2023-24. Therefore, from July 1, 20 percent tax collected at source (TCS) will be applicable on it. This will put a heavy burden of compliance on financial institutions. In the budget of 2023-24, the Finance Ministry had increased the LRS from 5 percent to 20 percent on the money spent on foreign tour packages, bonds, shares, real estate etc. The finance ministry on Thursday said details of expenses related to travel, education and medical treatment would be announced later. The finance ministry clarified that the objective of bringing international credit card charges under LRS was to bring parity with international debit card charges. Because International Debit Card charges are under LRS only.
