The Indian government recently announced a major change to simplify international transactions. The government announced that international debit and credit card users can now make payments of up to Rs 7 lakhs per financial year without being subject to LRS and TCS limits. Education and health payments will also benefit from TCS treatment.
This decision streamlines international transactions and makes them easier for consumers. The government wants to simplify cross-border payments by exempting international debit and credit card payments from LRS limits.
Payment Limit Changes
Under the new rules, individuals can use their international debit or credit cards for payments up to Rs 7 lakhs per financial year without LRS or TCS restrictions. This payment limit reduction eases international transactions significantly. It enables more convenient and valuable transactions.
The government’s exclusion of international card payments from LRS limits and TCS streamlines international transactions. The government wants to streamline payment processes by removing unnecessary restrictions. Business, education, and personal cross-border transactions will benefit from this.
Concerns about the Liberalized Remittance Scheme’s July 1, 2023, Tax Collection at Source (TCS) on small transactions prompted the government’s decision. To address these concerns and eliminate procedural ambiguity. The government’s initiative shows its commitment to transparent and seamless international transactions.
The Ministry’s TCS on international credit card spending under the RBI’s liberalized remittance scheme (LRS) has drawn criticism from experts and stakeholders. Critics say this could hinder business and reduce international spending. The government emphasizes that this step was taken to ensure clarity and avoid procedural ambiguity, facilitating smoother transactions.
The government will issue separate amendments to the Foreign Exchange Management (Current Account Transactions Rules), 2000 to implement the changes. These changes will simplify international LRS transactions. The upcoming amendments aim to simplify international payments so people can make them without hassle.