TCS on International Spends: Updates for Indians on Niyo Cards
TCS (Tax Collected at Source) is a way for the government to collect taxes upfront on certain transactions, including international spends. It is a small fee that is collected by the bank on behalf of the government when you spend more than a certain amount on international transactions. The good news is that you can claim a TCS refund for any excess tax paid when you file your income tax returns.
Introduction
At Niyo, we want to make sure you’re up to speed with these changes, so we’ve simplified the information for your easy understanding.
As of October 23rd, 2023, there have been some important TCS updates for Niyo users. Here’s what you need to know:
| Card Variant | TCS Limit up to ₹10 lakh | TCS Limit above ₹10 lakh | TCS Rate |
|---|---|---|---|
| Niyo SBM Credit Card | NA | NA | NA |
| Niyo SBM Debit Card | NA | Education (financed by a loan) | 0% |
| NA | Medical treatment/education (not financed by loan) | 5% | |
| 5% (Overseas tour package) | Overseas tour package | 20% | |
| NA | Other purposes | 20% | |
| DCB Niyo Debit Card | NA* | TCS applies | 20% |
| Niyo Equitas Debit Card | NA | TCS applies | 20% |
*If you have spent less than 7 lakhs, your TCS refund will be processed within 2-4 hrs. Otherwise, you can claim your refund when you file your income tax returns.
How to claim a TCS refund
To claim a TCS refund, you need to file your income tax return. The Income Tax Department will then process your refund claim and credit your account.
Here are the steps to claim a TCS refund:
- Gather all the necessary documents, including Form 26AS, if applicable.
- Fill up the Refund Claim Form.
- Attach all the essential documents with the Refund Claim Form.
- Submit the Refund Claim Form to the Income Tax Department.
- The Income Tax Department will process it and credit the amount to your bank account.
You can download the Refund Claim Form from the Income Tax Department’s website.
Niyo Cards
Niyo Credit Card: No TCS on international spend
Good news for Niyo credit card users! You can continue using your credit card for international spends without paying any TCS.
Niyo Equitas Debit Card: No TCS upto ₹7 lakhs
You can enjoy international spends up to ₹7 lakhs on your Niyo debit cards without any TCS deduction.
If you have a Niyo Equitas Debit Card, you won’t face any TCS deductions on transactions up to ₹7 lakhs. Only when your total spending crosses ₹7 lakhs or more will a 20% TCS deduction apply. However, even if your international spending exceeds ₹7 lakhs, you can still claim a refund when you file your Income Tax Return (ITR), so there’s no need to worry.
Niyo DCB Debit Card: No TCS upto ₹7 lakhs*
When you use the Niyo DCB Debit Card, you will notice a 20% TCS deduction on every transaction. The good news is that if your spending remains under ₹7 lakhs, the deducted amount will be promptly refunded within 2-4hrs on the same day. And even if your international spending exceeds ₹7 lakhs, you can still reclaim the refund during your Income Tax Return (ITR) filing process, so there’s no need for concern.
International tour and travel packages
Spending below ₹7 lakhs: A 5% TCS rate applies to any international tour or travel package booked through an Indian Tour Operator.
Spending above ₹7 lakhs: A 20% TCS rate will be applied to international tour and travel packages booked through an Indian tour operator.
TCS rate on education loan
It’s important to note that the TCS rate on education loans is lower than the general TCS rate. The applicable TCS percentage for education loans is 0.5%. This means that if you have remitted funds abroad for education purposes using an education loan, you will be charged a TCS of 0.5% on the amount exceeding Rs 7 lakh in a financial year.
For example, if you have remitted Rs 10 lakh abroad for education purposes using an education loan, you will be charged a TCS of Rs 1,500 (3 lakh * 0.5%).
Important Note: The TCS rate applies per individual, not per card. This means that if you are traveling with friends or family and you each have a Niyo debit card, your combined spending limit for the entire financial year is ₹14 lakhs. Also, TCS is not applicable to domestic spends, so you can continue to enjoy your local purchases without any TCS concerns.
Tips for using Niyo Cards to avoid TCS
- If you’re traveling with friends or family, you can use multiple Niyo Debit Cards to combine your spending and stay under the TCS threshold.
- Use the Niyo Credit Card for international spends if you anticipate spending more than ₹7 lakhs.
- Keep track of your total international spending on your Niyo Debit Card to ensure that it does not exceed ₹7 lakhs.
Key Takaways
TCS is a simple way to manage your taxes in advance. With Niyo debit cards, you can enjoy international spends up to ₹7 lakhs without any TCS deduction. Even if your international spending exceeds ₹7 lakhs in a financial year, the TCS refund can be claimed while filing your income tax return.
