Due date for implementation of revised TCS rates and for inclusion of credit card payments in LRS extended

The Government of India has decided to give more time for the implementation of Revised TCS rates for all purposes under LRS and for overseas travel tour packages and for the inclusion of credit card payments in Liberalised Remittance Scheme (LRS).

Now it has been decided that the increased TCS rates will apply from 1st October 2023.

In the earlier press release, it was decided that no change will take in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum.

Sub-section (1G) of section 206C of the Income-tax Act, 1961 (“the Act”) provides for Tax Collection at Source (TCS) on (i) foreign remittance through the Liberalised Remittance Scheme (LRS) and (ii) sale of overseas tour program package.

Through the Finance Act 2023, amendments were carried out in sub-section (1G) of section 206C of the Act. These amendments, inter alia, increased the rate of TCS from 5% to 20% for remittance under LRS as well as for purchase of overseas tour program package and removed the threshold of Rs 7 lakh for triggering TCS on LRS. These two changes were not applicable when the remittance is for education or medical purpose. These amendments were to take effect from 1^st July 2023.

This has been done to give adequate time to Banks and Card networks to put in place requisite IT-based solutions.

The Government has decided to postpone the implementation of its 16th May 2023 e-gazette notification. This would mean that transactions through International Credit Cards while being overseas would not be counted as LRS, but would not be subject to TCS. The Press Release dated 19^th May 2023 stands superseded.

Earlier and new TCS rates are summarised as under: