- Government amends the rules under the Foreign Exchange Management Act, to bring in the international credit card spends outside India under the Liberalized Remittance Scheme (LRS).
- The usage of an international credit card to make payments towards meeting expenses during a trip abroad was not covered under the LRS.
- The spendings 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 inclusion of such spendings under LRS.
- The move comes in the backdrop of surge in spending in overseas travel.
- Indians spent $12.51 billion on overseas travel between April-February of fiscal 2022-23, a rise of 104 percent compared to the same period of the last year
- The notification brings transactions through credit cards outside India under the ambit of the LRS with immediate effect, which enables the higher levy of TCS, as announced in the Budget for 2022-23, from July 1.
- This will also help track high-value overseas transactions and will not apply on the payments for purchase of foreign goods/services from India.
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB