The Ministry of Finance informed on Wednesday that the increase in withholding tax rates (TCS) which was to come into force on July 1, 2023, will now be applied from October 1, 2023. In this year’s budget, some changes have been announced to the withholding tax collection system (TCS) on payments under the liberalized remittance system (LRS) and on organized trips abroad. It was also announced in March that credit card payments would be subject to LRS.
The Ministry informed that many comments and suggestions were received regarding the changes to the TCS and LRS, which were carefully considered before announcing the appropriate changes.
No change in TCS rates for all purposes under LRS and for overseas tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum
The government is giving more time for the implementation of the revised TCS rates and for the inclusion of the credit card… pic.twitter.com/UWfm8XXKSi
— ANI (@ANI) June 28, 2023
In light of the suggestions received, the official communication from the ministry indicates that firstly, it has decided that there will be no change in the rate of TCS for all purposes under the LRS and for organized trips to the foreigner, regardless of mode of payment, for amounts to Rs 7 lakh per individual per annum.
In addition, it was also decided to give more time for the implementation of the revised TCS tariffs and for the inclusion of credit card payments in the LRS.
International credit card transactions abroad would not be counted as LRS and therefore would not be subject to TCS.
Previously, it was decided that 20% of the TCS would be imposed on all credit card spending abroad.
