RBI asked to monitor card spend under LRS
New Delhi, March 24, 2023
Seeking to tighten the implementation of the increased 20% tax collection at source norm for foreign remittances introduced in Budget 2023-24, Finance Minister Nirmala Sitharaman on Friday said the RBI has been asked to monitor the use of credit cards for foreign travel purposes.
“It has been represented that payments for foreign tours through credit cards are not being captured under the Liberalised Remittance Scheme (LRS) and such payments escape tax collection at source (TCS),” Ms. Sitharaman said about the scheme that governs foreign exchange spending by Indians. “The Reserve Bank is being requested to look into this with a view to bring credit card payments for foreign tours within the ambit of LRS and tax collection on source, thereon,” she said.
Tax consultants said the monitoring effort could prove challenging. “Credit cards usage overseas was always a part of LRS and it would be interesting to learn how RBI will monitor these,” said Hemal Mehta, partner at Deloitte India. The volume of such transactions could be huge and data analytics may have to be deployed to scrutinise these, he pointed out.