The imposition of 20 per cent TCS (tax collected at source) on credit card usage abroad, along with a ban on Indians keeping money for more than six months in overseas bank accounts, suggests somebody has examined patterns of overseas expenditures and savings in great detail.
The measures are, however, puzzling at first glance, and near-incomprehensible at second glance. Is this in order to curb overseas travel? Is it in order to bring tax evaders within the net? Is it to discourage (or perhaps to encourage) investing abroad? Will it generate a large interest-free float for the exchequer? The answers all seem to be in the negative.
First, there is nobody, literally nobody, who goes abroad with a forex-enabled credit card and is outside the income-tax net. Given the floor of Rs 7 lakh, before the TCS kicks in, this is guaranteed.
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