Govt. Brings International Credit Card Spending Under LRS, 20% TCS Payable

By including credit card transactions in the $250,000 Liberalized Remittance Scheme (LRS) limit, the government has moved to amend the Foreign Exchange Management (Current Account Transaction) Rules after consulting with the RBI.

The liberalized remittance scheme (LRS) enables citizens of India to send money abroad for a variety of predetermined uses without any restrictions or prior RBI approval.

The government has notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023.

Over and above the cap of $250,000, any foreign transfers or purchases require prior RBI approval.

Spending on credit cards was not previously included in the LRS ceiling. On July 1, however, everything is expected to change. The action appears to be intended to reduce the use of credit cards to get around LRS limits.

The International credit card transactions will also attract TCS at the rate of 20% from July 1. The TCS rate till June 30 is 5%.

Notification No. F. No. 1/5/2023-EM

Date: 16/05/2023

Click Here To Read The Notification