e Indian government has announced that it will be imposing a 20% tax collected at source (TCS) on all credit card transactions made internationally, effective July 1, 2023. This means that if you use your credit card to make a purchase from a foreign merchant, you will be charged an additional 20% in taxes.
There are a few exceptions to this rule. For example, education and medical expenses are still exempt from TCS. However, most other types of international spending will be subject to the new tax.
This new TCS is likely to add to the cost of international travel for Indians. It is important to be aware of this new tax so that you can budget accordingly.
Here are some things to keep in mind about the new TCS:
The TCS will be collected by the merchant, not the cardholder. This means that when you make a purchase with your credit card, the merchant will collect the TCS and remit it to the government.
The TCS will be applied to the full amount of the purchase, including any foreign exchange fees.
The TCS will be calculated on the spot, so you will not be able to see the total amount of your purchase until after the TCS has been applied.
The TCS will be refunded if the purchase is cancelled.
If you are planning an international trip, it is important to factor in the cost of the new TCS. You can do this by using a credit card that does not charge foreign transaction fees. You can also use a travel credit card that offers rewards, such as points or miles, that can be redeemed for travel expenses.