Regulatory Referencer

Rule 5 of the FEM (Current Account Transactions) Rules, 2000 allows for payments to be made for specified purposes as mentioned in Schedule III but within prescribed limits. Liberalised Remittance Scheme of the RBI allows remittance by resident individuals for transactions specified under this Schedule III up to USD 250,000 per financial year. Rule 7 of the FEM (Current Account Transactions) Rules, 2000 exempted payments made through international credit cards while on a visit outside India from Rule 5 and hence effectively they were outside the LRS limits too. However, Rule 7 now stands omitted resulting in transactions made through such use of ICCs to be covered under LRS. Purpose was to bring transactions made through ICCs under the Tax Collected at Source (TCS) net. Immediately, thereafter FAQs were released for both LRS and TCS on LRS through tweets providing clarifications and explanations on LRS and TCS on LRS. Some reliefs are also proposed. Then, a day later, another tweet clarified that payments by an individual using ICC or International Debit Card upto Rs. 7 lakhs per financial year would be excluded from LRS and hence TCS also. Necessary changes to the CAT Rules are proposed to this effect but as of now on