Former BharatPe MD Ashneer Grover criticises increased TCS rate on international credit card spending

Former BharatPe MD Ashneer Grover criticises increased TCS rate on international credit card spending

The Ministry issued a fresh notification stating that spending in foreign currency through international credit cards would be covered under the Reserve Bank of India's liberalized remittance scheme (LRS).

FPJ Web DeskUpdated: Friday, May 19, 2023, 08:26 AM IST
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Former BharatPe MD Ashneer Grover criticises increased TCS rate on international credit card spending | Photo credit: IANS

After the Centre announced an increased Tax Collected at Source (TCS) rate of 20 percent on international credit card spending, former BharatPe MD Ashneer Grover criticized the new notification. Grover took to Twitter, highlighting the disparity between tax deductions and exemptions for political donations, labeling the government's decision as interesting.

"20 per cent TCS on foreign travel, 20 per cent TCS on foreign credit card spend, and the LRS limit is an interesting rule. It is interesting to note that political donations never attract TCS of any kind. There individuals and companies get a tax rebate)," said Grover in his tweet.

Ministry notification: Foreign credit card spending covered under LRS

The Ministry issued a fresh notification stating that spending in foreign currency through international credit cards would be covered under the Reserve Bank of India's liberalized remittance scheme (LRS). The LRS allows residents to remit money overseas up to USD 2.50 lakh per annum without requiring RBI authorization.

TCS rate hike announced in Union Budget 2023

In the Union Budget 2023, Finance Minister Nirmala Sitharaman announced an increase in TCS rates effective from July 1, 2023. The new rates raised the existing 5 per cent TCS on overseas tour packages and funds remitted under LRS, except for education and medical purposes.

Political donations exempted from TCS

Under the previous tax regime, Indian companies donating to registered political parties could claim a deduction for the contributed amount under Section 80GGB of the Income Tax Act, 1961. However, political donations are not subject to any form of TCS, unlike foreign travel and credit card spending.

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