The FEMA Current Account Transactions Rules, 2000 hitherto exempted payments made through International Credit Cards (ICC) towards meeting expenses during an overseas visit, from RBI's approval on exceeding the monetary threshold prescribed. Omission of Rule 7 of the Current Account Transactions Rules brings such ICC payments within the Liberalised Remittance Scheme (LRS) limit which is capped at USD 250,000. RBI's approval is required for remittances made beyond such freely available limit. This amendment, in some sense, not only curtails the overall foreign remittances an individual can make but could also cast an additional cost of 20 percent on the remitter in the form of TCS. The Finance Act, 2023 had enhanced the TCS rates applicable on remittances made other than for education and medical purposes to 20 percent. Although a credit for such taxes can be claimed at the time of return filing, individuals could face cash flow/ working capital issues, due to timing difference between the point of taxation and subsequent tax refunds, which would be available only after the tax return is processed. For business spends made by an individual, which are later reimbursed by the employer company, TCS is bound to be an added hassle.
Methodology for collection of taxes is yet to be prescribed, not sure if credit card companies/ operators/ issuers, would be responsible for this, based on guidance set by the RBI. International purchases on internet/ web vis-a-vis foreign spends while travelling abroad are equally in vague and needs to be clarified.
No comments:
Post a Comment