Banks seek one more month to comply with international card spend rule

Lenders have sought a one-month extension from the government to comply with the Liberalised Remittance Scheme (LRS) for international credit card spends, said people familiar with the matter.

 The scheme allows Indian residents to remit up to $250,000 abroad in a financial year for permissible purposes such as education, travel and investment. Last year, the government announced that forex transactions through credit cards would be covered under the scheme and charged 20% tax collected at source (TCS) beyond the threshold of Rs. 7 lakh per fiscal.

Senior bank executives decided, at a meeting held earlier this month, to seek an extension till June 30 to fully calibrate their systems to report such transactions. “Earlier this month a communication was received from the RBI on the preparedness for implementing the guidelines,” said one of the executives, who did not wish to be identified.

Banks need more time for customer awareness, staff training and system calibration for smooth implementation, the executive said. In its communication to banks and the Indian Banks’ Association (IBA), the RBI suggested that they work out a standard operating procedure for uniformity and smooth implementation, the executive said.