To bring overseas credit card spending above ₹7 lakh, budget 2024 is expected to include a provision under the Liberalised Remittance Scheme (LRS), according to a Moneycontrol report.

Currently, spending over ₹7 lakh in a financial year using debit cards, forex cards, and certain other methods attracts a 20% Tax Collected at Source (TCS). However, credit card transactions are exempted from this tax.

This exemption was initially granted due to the direct linkage of debit cards with bank accounts, which facilitated easier monitoring.

Banks were granted time to develop infrastructure for overseeing international credit card transactions.

According to the report, the upcoming budget is likely to revise these regulations, aiming to include credit card transactions within the TCS framework.

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RBI’s Liberalised Remittance Scheme (LRS)

The LRS scheme of the Reserve Bank of India (RBI) allows an Indian resident to transfer up to $250,000 outside India in a financial year.

This scheme has witnessed robust utilisation, as shown by RBI data indicating outward remittances under LRS soaring to $31.73 billion in 2023-24, marking a 16.91% increase from the previous year’s $27.14 billion.

The interim budget presented by Finance Minister Nirmala Sitharaman on February 1 this year did not encompass international credit card transactions under the TCS framework.

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