TCS on Foreign exchange and spending after July 1st 2023

S

sanz1112

Disciple
I'm so confused with this new Tax Rule regarding TCS on foreign exchange, remittance and spending in foreign currency.
Many finance blogs states that after 1 July a 20% TCS will be charged on all foreign expenditures without any limit, however on my Niyo global app it says the 20% TCS is only applicable if the expenditure on my Niyo Global card exceeds 7 lakhs.

I have a trip to Maldives lined up in July and hence I have few questions regarding this
  1. Will this 20% TCS applicable on buying Maldives currency MVR (Maldivian Rufiyaa) ?
  2. If I spend money using my Niyo Global card will there be TCS charged on those transactions, even if the total transactions does not exceed 7 Lakhs INR ?
  3. If spending money in cash for shopping in MVR will there be any tax liability ?
  4. If answer of all the above is yes then how can one avoid paying this tax. 20% is kinda huge IMO.
 
There was a clarification issued on 19th May where they said limit of 7 lakh remains. Here's the link to the original source to avoid any confusion
pib.gov.in

Clarification regarding applicability of Tax Collection at Source to small Debit/Credit Transactions under LRS

Concerns have been raised about the applicability of Tax Collection at Source (TCS) to small transac
pib.gov.in
This is a press release of the ministry itself.

This clarification says the exemption is applicable for debit and credit card transactions. Which likely means that direct purchase of forex will still attract TCS.

Another thing you need to know is that TCS is not additional charge and you won't incur this expense. You can set it off against your income tax. So while your immediate burden will be increased, overall, you won't be losing any money.

This whole thing has been poorly managed and the decline in quality of online media is evident here. Since all articles are now written by bots, clear information is impossible to come by.
 
This whole policy is harebrained, and the banks way of implementing it - levying 20% and returning it within 15 days is brain dead and affects both individuals and businesses in a bad way.
 
Credit cards have been put out of it...which is good....and Niyo does returns it....have used it multiple times and and in May also for maldives trip.
 
rockyo27 said:
Credit cards have been put out of it...which is good....and Niyo does returns it....have used it multiple times and and in May also for maldives trip.
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The new TCS rule has not yet implemented earlier it was only on Forex and that too when it exceeds 7 Lakhs. Credit cards and I guess even Forex cards were put out of it but as per new rule everything will now come under it and there is no limit of 7 lakhs now on Forex and Forex cards and only credit cards now have that limit. Also the TCS has been hiked to 20% from 5% which is kinda insane IMO
 
sanz1112 said:
The new TCS rule has not yet implemented earlier it was only on Forex and that too when it exceeds 7 Lakhs. Credit cards and I guess even Forex were put out of it but as per new rule everything will now come under it and there is no limit of 7 lakhs now on Forex and Forex cards and only credit cards now have that limit. Also the TCS has been hiked to 20% from 5% which is kinda insane IMO
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Yeah that 20% is very high....will have to over-provision for next years trip
 
sanz1112 said:
The new TCS rule has not yet implemented earlier it was only on Forex and that too when it exceeds 7 Lakhs. Credit cards and I guess even Forex cards were put out of it but as per new rule everything will now come under it and there is no limit of 7 lakhs now on Forex and Forex cards and only credit cards now have that limit. Also the TCS has been hiked to 20% from 5% which is kinda insane IMO
Click to expand...
Ok I just read the new notification on post shared above. It seems now the credit and debit cards are put out of it until further notification. This whole thing is so damn confusing and the funny thing is even Government seems to have no idea how they are going to implement it, they just released the notification earlier in may with Budget 2023 without giving much thoughts probably because 5 to 20% hike sounds cool to them lol.
 
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