The clarification comes days after the ministry's decision to bring international credit card spending under the RBI's liberalised remittance scheme and the consequent levy of 20 per cent TCS evoked sharp reactions from experts and stakeholders.
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.
The Finance Ministry has published an FAQ on its announcement that international credit card payments will come under the RBI's liberalised remittance scheme, or LRS.
Spending in foreign exchange through international credit cards will be covered under the RBI's liberalised remittance scheme, under which a resident can remit money abroad up to a maximum of $250,000 per annum without the authorisation of the Reserve Bank of India, as per a finance m inistry notification.
The ministry on May 16 notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, to include international credit card payments in the LRS.