Travellers planning overseas trips or foreign tours post July 1 will have to shell out extra 20 per cent money on all the transactions done via any payment method. They will now also find it hard to make large overseas spending over and above the LRS limit.
Prior to this, the usage of an international credit card to make payments towards meeting expenses during a trip abroad was not covered under the LRS. The spendins through international credit cards were excluded from LRS by way of Rule 7 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000. With the latest notification, Rule 7 has now been omitted, paving way for the in inclusion of such spendings under LRS.
Rikant Pittie, co-founder of EaseMyTrip said the new amendment will increase travellers’ initial, upfront costs by 20%. “It is essential for Indian travellers to factor in this additional financial obligation while making payments for overseas travel. However, the overall cost of travelling remains unchanged as travellers can claim TCS credit while filing their tax returns,” he added.
Through a notification on May 16, the government included international credit card spends by individuals when they travel overseas under the annual LRS limit of $ 250,000 . Earlier this year, in the budget, the government had raised the tax collected at source (TCS) rate to 20% from 5% on overseas tour packages and funds remitted under LRS other than for educational and medical purposes.