{"id":243445,"date":"2023-05-22T20:21:31","date_gmt":"2023-05-22T14:51:31","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=243445"},"modified":"2023-05-23T09:22:43","modified_gmt":"2023-05-23T03:52:43","slug":"undo-the-un-liberalised-remittance-policy","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/undo-the-un-liberalised-remittance-policy\/","title":{"rendered":"Undo The Un-Liberalised Remittance Policy"},"content":{"rendered":"\n

Source:\u00a0<\/strong>The post is based on the article\u00a0\u201cUndo The Un-Liberalised Remittance Policy\u201d <\/strong>published in The Times of India <\/strong>on\u00a022nd\u00a0May 2023.<\/b><\/strong><\/p>\n

Syllabus<\/strong>: GS \u2013 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.<\/p>\n

Relevance<\/strong>: About the tax on international credit card transactions.<\/p>\n

News<\/strong>: The Centre has amended rules under the Foreign Exchange Management Act (FEMA) to bring international credit card spending outside India under the Liberalised Remittance Scheme (LRS).<\/p>\n

What is Liberalised Remittance Scheme (LRS)?<\/h2>\n\n\n\n
Read here: Liberalised Remittance Scheme (LRS)<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

About Tax on international credit card transactions and its advantages<\/span><\/h2>\n\n\n\n
Must read: Tax on international credit card transactions: rationale and challenges \u2013 Explained, pointwise<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A 20% (presumptive) tax deducted at source will only be levied on credit and debit credit card purchases of non-medical and non-educational purchases of over \u20b97 lakh per person per year.<\/p>\n

Note<\/strong>: The LRS allows for each individual to send (spend) abroad \u20b9205 lahks ($250,000) per year.<\/em><\/p>\n

What are the expert\u2019s opinions about imposing Tax on international credit card transactions?<\/span><\/h2>\n\n\n\n
Read here:\u00a0International credit card spends outside India will attract 20% TCS: How cardholders may be impacted<\/a>\u00a0\u00a0<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

What are the concerns associated with the tax on international credit card transactions?<\/h2>\n

Revenue to government and loss to citizens<\/strong>: If one spends \u20b91,000 on travel, then this expenditure is deemed income. The government collects \u20b9200 immediately as the presumptive tax on the person’s presumed income.<\/p>\n

As per the fixed deposit rate of 7%, the government gained(\u20b9200 x 0. 07 = \u20b914) certain amount prior to the tax return. Indians spent close to \u20b91. 1 lakh crore on foreign travel in 2022-23. For the extra 0. 7% tax, that is a revenue gain of \u20b9770 crore.<\/p>\n

Not the only way to track individuals<\/strong>: Not help in The government said that the taxation of foreign travel expenses would help track individuals with \u201cexpenditures disproportionate to income\u201d. But among the global leaders in fintech, the government already has the expenditure information on foreign card travel, from which they can compute and assess whether expenditures are disproportionate to income.<\/p>\n

No need to save forex<\/strong>: India’s reserves to imports ratio is at around nine months of imports. This is among the top 5% of non-oil economies in the world. In other words, there is a zero case for a TDS policy on LRS for \u201csaving\u201d foreign exchange.<\/p>\n

What should be done?<\/h2>\n

The LRS policy was first introduced in 2004 with the short-term goal of decreasing the pressure of exchange rate over-valuation by creating a demand for dollars, and the longer-term goal of capital account convertibility.<\/p>\n

But the proposed amendment to LRS is an ultra-regressive policy change and is against India’s goals and ambitions as a society and the economy. So, the government should revert the modified LRS policy.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source:\u00a0The post is based on the article\u00a0\u201cUndo The Un-Liberalised Remittance Policy\u201d published in The Times of India on\u00a022nd\u00a0May 2023. Syllabus: GS \u2013 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Relevance: About the tax on international credit card transactions. News: The Centre has amended rules under the Foreign… Continue reading Undo The Un-Liberalised Remittance Policy<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10496],"class_list":["post-243445","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700129535},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/243445","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=243445"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/243445\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=243445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=243445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=243445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}