The All-India Association of Authorized Money Changers and Money Transfer Agents demands the inclusion of foreign currency cash, wire transfers through banks, pre-paid forex cards and other international payments into the TCS exemption ambit offered to the overseas transactions using debit and credit cards under the Liberalized Remittance Scheme (LRS).
The Union Ministry of Finance recently stated that, from July 1, transactions carried out overseas using debit and credit cards will be exempted from the 20 per cent Tax Collected at Source (TCS) up to Rs 7 lakh per financial year. However, no specific guidance has been issued regarding other widely-used international payment options, including foreign currency cash, wire transfers through banks, prepaid forex cards, and various modes of international transactions frequently used by individuals during overseas trips for both leisure and employment purposes.
The Money Exchange industry expects the Central Government to ensure a level-playing field for all overseas transactions, regardless of the mode of payment or instruments used. Travellers use various options like foreign currency cash (within the permitted limits of $3,000 or its equivalent), prepaid Forex Travel Cards, wire transfers, as well as debit and credit cards. It is important to note that the common man, particularly first-time travellers, often lack awareness about the forex requirements while traveling abroad. Normally, they carry INR cash and seek destination currency upon arrival at an airport terminal. According to immigration data published by the Directorate General of Civil Aviation (DGCA), over 60 per cent overseas travellers are first-time flyers, primarily from blue-collar backgrounds and falling outside the income tax bracket. This economically weaker section of society, with limited education and having no debit or credit card facility, deserves equal treatment with the debit and credit card holders.
Commenting on the development, TC Guruprasad, Vice Chairman of All India Money Exchange and Money transfer Association, said: “The notification will have a direct impact on individuals travelling abroad for employment, especially the labour/ working class, who belong to the low-income group and have no access to card payment facilities. This group of travellers generally procures foreign currencies in the form of cash from the money exchange outlets operating at international airports or city outlets and a levy of 20 per cent TCS on such transactions will be a severe blow to them as they do not fall under the income tax bracket.”
The industry requests the government to extend the exemption of TCS to the purchase of cash, wire transfers, and prepaid forex cards. The association remains committed to advocating for a fair and equitable environment for all individuals engaged in overseas transactions. It is imperative to address the concerns of economically weaker sections, first-time travellers, and the labour and working classes to ensure inclusive policies and practices.
