In this blog post, we will discuss a recent amendment that has significant implications for international credit card transactions and the associated tax obligations.
Background:
Following the Government's previous recommendations to the Reserve Bank of India (RBI) to assess the feasibility of incorporating international credit card transactions into the Liberalized Remittance Scheme (LRS), a new amendment has now come into effect as of May 16, 2023. This amendment brings international credit card payments within the purview of the LRS scheme, resulting in an additional 20% tax liability.
Impact and Scope:
The recent amendment is expected to have a broad impact, encompassing various types of expenses incurred during overseas visits, whether for personal or business purposes. Consequently, every international credit card transaction will now attract an extra 20% tax. It is crucial to closely examine how this tax will be collected by banks or credit card companies.
Stay Informed and Review Statements:
In light of this development, it is prudent for individuals to remain vigilant and proactively review their credit card statements. Ensuring accurate record-keeping and understanding the tax implications associated with international credit card transactions will help individuals comply with the new tax obligations.
Conclusion:
The introduction of an additional 20% tax on international credit card transactions under the LRS scheme signifies a notable change in the taxation landscape. It is expected that government will release FAQs in this regard.
Stay tuned for more news and expert analysis on the latest developments in the field of taxation.
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