No TCS on overseas credit card spends

New Delhi, June 28

The government on Wednesday dropped plans to levy tax collected at source (TCS) on overseas payments made through Z. It said such expenses will be included in the Liberalised Remittance Scheme (LRS) of the RBI.

The Finance Ministry has also deferred by three months the implementation of a higher TCS rate of 20 per cent on expenditures made under the LRS and overseas tour packages till September 30.

The new rates will come into effect from October 1.

In a statement, the ministry said to give adequate time to banks and card networks to put in place requisite IT-based solutions, the government had decided to postpone the implementation of its May 16 notification through which credit card expenses were brought under LRS.

The ministry also clarified that “transactions through international credit cards while being overseas would not be counted as LRS and hence would not be subject to TCS”.

The Budget 2023-24 had raised TCS rates on LRS and foreign tour packages from 5 per cent to 20 per cent, effective July 1.