IT department gave important update on TCS deduction on credit card transactions abroad, rules will be issued soon

The Income Tax Department will soon issue a clarification on levying TCS of 20 percent on foreign spending through credit cards. These clarifications will be given in the form of FAQs.
The notification bringing credit card expenses under LRS was issued. After this, concerns have been raised about how banks will segregate personal and business expenses. The tax department will issue FAQs regarding the criteria on which banks will deduct TCS on these expenses.
Raman Chopra, Joint Secretary, Ministry of Finance informed that the government will soon issue clarifications on the methods of TCS provisioning. This has been discussed with the Finance Secretary, Revenue Secretary, and Finance Minister of the Income Department. The Income Tax Department will clarify the frequently asked questions regarding TCS. Full details regarding the collection and extent of TCS will be given. This information was given by Raman Chopra in a program of CII.
After the notification of May 16, the issue of TCS came into the headlines. If a person pays for expenses incurred abroad in foreign currency or uses an international credit card, then TCS will be deducted from his expenses. This TCS will be deducted under the Liberalized Remittance Scheme (LRS) of RBI.
Let us tell you that under LRS, a person can send only 2.5 lakh dollars abroad every year. If you send more money than this, you will have to take approval from RBI.
Foreign transactions under LRS will attract 20 percent TCS from July 1. This would also include credit card expenses. This notification was criticized. After which the Finance Ministry issued a statement on 19 May. It said that if more than Rs 7 lakh is spent in a year through a credit card, then that too will be included in TCS. Till now the government has not issued a formal notification regarding this.
Earlier debit card payments were also included in TCS. In the year 2021-22, the total remittance under LRS was US$ 19.61 billion, which increased to US$ 12.68 billion in 2020-21. This amount has increased to more than USD 27.14 billion in 2022-23.