Explained: Why Credit Card Spends Overseas Won't Be Taxed At Source

Credit card spends overseas will not attract tax collected at source as such transactions have been kept outside the liberalised remittance scheme.

While credit card spends overseas will not attract tax collected at source now as such transactions have been kept outside the liberalised remittance scheme, any international transaction conducted from India will attract the levy. 

Users or consumers purchasing foreign goods and services through an international merchant will need to pay 5% upfront. 

The government's announcement in the Budget this year to bring all international credit card transactions under the ambit of the liberalised remittance scheme - which would have entailed a higher tax collected at source (TCS) rate of 20 per cent for transactions over Rs 7 lakh in a year - had attracted criticism. 

The finance ministry announced yesterday that the implementation of a higher TCS of 20 per cent on expenditures made under LRS and overseas tour packages has been deferred till September 30. The new rates will come into effect from October 1.