The tax department will soon come out with a clarification in the form of ‘Frequently Asked Questions’ (FAQ) to differentiate between expenditure incurred on personal travel and business travel.
This will be useful in relation to levy of TCS (Tax collected at source) on credit card expenses abroad. A senior official said on Friday that the situation would be clarified by issuing an FAQ on levying 20 per cent ‘tax collection at source’ (TCS) on credit card payments abroad. The system of collecting TCS is going to be implemented from July 1.
It was announced to bring under the ambit of LRS
The ministry had decided to bring the expenses incurred through international credit cards under the ambit of the Liberalized Remittance Scheme (LRS), due to which 20 per cent TCS is applicable. Experts and concerned parties had expressed a sharp reaction to this. A concern was also raised about how personal and business expenses would be segregated by the banks. On this, Raman Chopra, Joint Secretary (Tax Policy and Legislation) in the Ministry of Finance, said that the government will soon issue a clarification on the implementation of the TCS provision.
Clarification will be issued after deep discussion
He said in a program of Industry Board CII, “There has been a lot of discussion with the Finance Secretary, Revenue Secretary and Finance Minister. We are definitely going to bring some clarifications and FAQs on that. This will clarify the position regarding the doubt as to how TCS is to be collected and to what extent it will not be collected. He was replying to a question on how the tax department would differentiate between business travel and personal travel for taking TCS on credit card expenses.
