Govt defers tax hike on foreign remittances, spares credit cards

The central government on Wednesday deferred its budget announcement of raising tax collected at source (TCS) rate on overseas remittances and rolled back the move to include credit card spending while abroad within the scope of this mode of tax collection.

- Gireesh Chandra Prasad

New Delhi: The finance ministry also clarified that for overseas remittances upto ₹700,000, no TCS will apply except in the case of buying tour packages, which will continue to attract 5% TCS and not 20% as per the plan originally announced in the budget which was to take effect from 1 July.

The relief comes after experts and banks raised their concerns about increased compliance burden. Besides, to implement the TCS provisions, especially in the case of credit card use abroad, banks needed to rework their systems.