The government has delayed the implementation of new Tax Collected at Source rates for international transfers, including travel packages, from July 1, 2023, until October 1. According to the Ministry of Finance, the choice was made to provide banks and card networks enough time to implement the necessary IT-based solutions.
According to the government, more time has been allowed for the Liberalised Remittance Scheme (LRS) and the implementation of the amended TCS rates. Additionally, the government reversed its plan to include transactions for international travel under LRS.
TCS rates, however, remain unchanged for all purposes and for international travel and tour packages, regardless of the method of payment, for sums up to Rs 7 lakh per person each year.
According to the ministry, transactions made with international credit cards while travelling abroad would not be included in LRS and would not be subject to TCS.
The TCS shall continue to apply at a rate of 5 per cent for the first Rs 7 lakh per individual per annum and the 20 per cent rate will only apply for expenditures over this limit for the purchase of an international trip programme package under Clause (ii) of Subsection (1G), according to the ministry.
