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Liberalized Remittance Scheme - RBI
July 17 , 2024
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- To curb large foreign exchange outflows, the Union Budget may bring overseas credit card spending above Rs 7 lakh under the Liberalised Remittance Scheme (LRS).
- The credit card spend thus is likely to be brought under 20 percent tax collected at source (TCS).
- Under the RBI’s LRS scheme, an Indian resident can transfer funds of up to USD 250,000 in a financial year outside India.
- The objective is to discourage excessive remittances under the LRS.
- Currently, the expenditures using debit cards, forex cards, or other payment methods incur a 20 percent TCS once they surpass the Rs 7 lakh per person per financial year threshold.
- In contrast the credit card transactions have been exempted from TCS under LRS rules.
- Outward remittances under LRS reached $31.73 billion in 2023-24.
- It is a 16.91 percent rise from $27.14 billion in the previous year.
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