It is a relief that the government has decided to defer the implementation of 20% tax collected at source on overseas credit card transactions to 1 October from 1 July. Issuer banks that must keep track of such swipes had been in a bind, hoping that the government would extend the rollout date while offering them clarity. They are reported to have flagged confusion over certain cases that often arise, such as when transactions are reversed or when multiple cards are used for payments that now count as remittances under India’s scheme for transferring money abroad.
The charge will kick in once an individual’s total card spending exceeds ₹7 lakh a year, but foolproof data collation that covers each dollar spent on every card is a tough ask. The odd part is how much trouble must be taken for the collection of money that our tax department adjusts against the annual income tax liability of taxpayers. It’s a revenue-neutral levy primarily designed to catch tax evaders. Even if that counts as a data advantage, the burden borne by banks and taxpayers, whose calculations could get extremely complex, is far too heavy to justify the move. What sounds useful on paper can be a nightmare in practice.
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Updated: 28 Jun 2023, 11:31 PM IST
