The central government's move has received strong pushback on social media as it could make foreign travel much more expensive for people, hurt credit card issuers and the overall tourism industry.
It is important to note that previously, the use of credit cards for foreign expenditures during travel was not included under the LRS. The scheme had previously covered debit cards, forex cards, and bank transfers
In a move that will increase the compliance impact as well as lock up additional amounts of money for credit card users, the government has scrapped Rule 7 of the Foreign Exchange Management ( Current Account Transactions) Rules 2000.
This would enable the RBI to monitor the usage of credit cards for foreign travel more closely and to ensure that payments for such tours through a credit card do not escape tax collection at source