No TCS on overseas spending of up to Rs 7 lakh

New Delhi: The government on Friday announced that no tax will be charged on overseas spending of up to Rs 7 lakh in a year using debit or credit as it looked to douse backlash from its earlier decision of levying tax collected at source (TCS) on all spending. The government had earlier this week brought overseas credit card spending under Liberalised Remittance Scheme (LRS).

This meant that any spending using credit cards overseas would attract a 20 per cent tax from July 1. Debit card spending was already part of LRS. However, the move to levy TCS attracted criticism with some calling it "tax terrorism". On Friday evening, the government said no TCS will be deducted on the spending of up to Rs 7 lakh overseas using any debit or credit card.