Using a credit card while traveling abroad? So this is good news for you, the government has changed the rule.

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If you frequently travel abroad and use credit card (20% TCS on credit card) to spend there; So doing this now can be heavy on your pocket. The government has changed the rules in this regard. Now you have to pay 20% tax collection at source ie TCS on any credit card payment abroad. Following the advice of the Reserve Bank of India (RBI), the government has approved changes in the FEMA rules. The new rules will come into effect from July 1.

FEMA rules changed

In fact, the central government has amended the rules of the Foreign Exchange Management Act (FEMA). In a notification, the government said that spending outside India through credit cards is brought under the Liberalized Remittance Scheme (LRS). In Budget 2023, the government increased TCS rates on foreign tour packages and LRS to 20% from the existing 5%. The new rates will be applicable from July 1, 2023, excluding education and medical expenses. However, you can claim TCS in your tax return.

How much amount is allowed to be sent till date?

There is a separate law for sending money to India for Indians settled abroad. It is called Liberalized Remittance Scheme or Liberalized Money Remittance Scheme. Under this scheme an amount of $2.5 lakh can be remitted without the permission of RBI. Permission is required for additional amount. Earlier international credit cards were excluded under Rule 7 of FEMA. But this Rule 7 has now been removed, covering the use of credit cards abroad as well. That means now if you use a credit card abroad, it will come under the purview of LRS.