After the Centre announced that an increased Tax Collected at Source (TCS) rate of 20 per cent will be imposed on international credit card spending, former BharatPe MD Ashneer Grover slammed the new notification. Taking a jibe at the Indian government’s ‘interesting’ rule, Grover on Thursday said that instead of tax deduction, political donations enjoyed tax exemption.
“20 per cent TCS on foreign travel, 20 per cent TCS on foreign credit card spend, and the LRS limit is an interesting rule. It is interesting to note that political donations never attract TCS of any kind. There individuals and companies get a tax rebate),” the founder of Third Unicorn wrote on Twitter.
The ministry on Tuesday in a fresh notification said that spending in foreign exchange through international credit cards will be covered under the Reserve Bank of India’s liberalised remittance scheme (LRS). Under this scheme, a resident can remit money overseas up to a maximum of USD 2.50 lakh per annum without the RBI authorisation.
In the Union Budget 2023, Finance Minister Nirmala Sitharaman had hiked TCS rates from the current 5 per cent on overseas tour packages and funds remitted under LRS (other than for education and medical purposes), effective from July 1, 2023.
Under the old tax regime, any Indian company that donates to a political party registered in India can claim a deduction for the amount contributed under Section 80GGB of the Income Tax Act, 1961.