As of July 1, 2023, the RBI is going to introduce new regulations for international credit card transactions and foreign travel expenses. In an effort to regulate foreign remittances and promote financial stability, the Reserve Bank of India (RBI) has recently made the decision that will impact international credit card holders and the foreign travelers. These changes aim to streamline the process and bring about greater transparency in the financial system.
In this article, we’ll discuss various nuances that may affect your international credit card & transactions in the year 2023.
According to RBI’s new guidelines, international credit card transactions will now be counted under the annual foreign remittance limit of $250,000. This means that any transactions made using your credit card abroad will be considered as a part of this limit. It is important to keep track of your spending to ensure you stay within the permitted limit and avoid any inconveniences.
From July 1, 2023, the tax collected at source (TCS) on foreign travel expenses is set to rise from 5% to 20%. This means that a higher percentage of your foreign travel expenses, such as airfare, hotel bookings, and tour packages, will be deducted as TCS at the time of payment. It is essential to factor in this increased cost while planning your international travel budget.
Apart from that, 20% TCS (Tax Collected Source) will be implied on Credit Card Forex payments. The inclusion of Forex payments is under the Liberalized Remittance Scheme (LRS) of the Indian Government and imposition of 29% TCS on such transactions. This implies that when you make Forex payments using your credit card for purposes like education, medical treatments, or investments abroad, 20% of the transaction value will be deducted as TCS. This update calls for careful consideration of alternate payment methods and potential cost implications.
While this changes aim to regulate International transactions and streamline the financial system, they may impact individuals so frequently engaged in overseas transactions. To mitigate the effects and the following strategies:
- Plan wisely your expenses while overseas transactions to stay within the limits set by RBI.
- Consider using other forms of payment, such as prepaid travel cards or digital wallets, which may have different regulations and costs associated with them.
- Seek professional advice in case you frequently travel and engage in international transactions or have concerns regarding the new regulations. Consult a financial advisor or tax expert to provide you personalized guidance based on specific circumstances.
As the RBI introduces new regulations for the international card transaction for and travel expenses it is crucial to stay informed and understand how the changes may impact your financial activities. By raising yourself the guidelines and taking productive majors you can navigate these updates effectively and sure of smooth experience with your International transactions. Remember to stay up to date with the official announcement and seek professional advice as needed.