Module: | MODULE A: INTERNATIONAL BANKING
Q33: Consider the following statements regarding the usage of international payment cards and their categorization under the Liberalised Remittance Scheme:
Statement 1: Expenses incurred by a resident individual using an International Debit Card while on a private visit abroad are actively tracked and consumed within the 250,000 US Dollars annual limit.
Statement 2: To prevent excessive taxation on routine travel, the central bank has permanently excluded overseas transactions made via International Credit Cards from the annual limit and the corresponding advance tax collection framework.
Statement 3: Resident individuals can freely use their International Credit Cards to purchase restricted foreign lottery tickets online, as credit card transactions fall outside the purview of the foreign exchange scheme.
Which of the statements given above are correct?
Statement 2: To prevent excessive taxation on routine travel, the central bank has permanently excluded overseas transactions made via International Credit Cards from the annual limit and the corresponding advance tax collection framework.
Statement 3: Resident individuals can freely use their International Credit Cards to purchase restricted foreign lottery tickets online, as credit card transactions fall outside the purview of the foreign exchange scheme.
Which of the statements given above are correct?
✅ Correct Answer: A
The correct answer is A. Statements 1 and 2 are correct, while Statement 3 is incorrect.
The regulatory treatment of international payment cards involves distinct classifications.
Structurally, transactions made using an International Debit Card draw directly from a resident's domestic bank account; hence, they are actively counted against the 250,000 US Dollars annual limit and are subject to the applicable Tax Collected at Source.
Statement 1 is accurate.
Historically, the government attempted to bring International Credit Cards under the scheme to plug tracking loopholes.
However, following operational challenges and public feedback, the central bank officially deferred this inclusion.
Consequently, overseas spending via International Credit Cards remains outside the scheme's limits and is exempt from the tax collection at source, making Statement 2 correct.
Statement 3 is entirely incorrect because prohibited transactions, such as buying lottery tickets or sweepstakes, remain strictly banned across all payment modes, regardless of whether a credit card or a debit card is utilized.
The regulatory treatment of international payment cards involves distinct classifications.
Structurally, transactions made using an International Debit Card draw directly from a resident's domestic bank account; hence, they are actively counted against the 250,000 US Dollars annual limit and are subject to the applicable Tax Collected at Source.
Statement 1 is accurate.
Historically, the government attempted to bring International Credit Cards under the scheme to plug tracking loopholes.
However, following operational challenges and public feedback, the central bank officially deferred this inclusion.
Consequently, overseas spending via International Credit Cards remains outside the scheme's limits and is exempt from the tax collection at source, making Statement 2 correct.
Statement 3 is entirely incorrect because prohibited transactions, such as buying lottery tickets or sweepstakes, remain strictly banned across all payment modes, regardless of whether a credit card or a debit card is utilized.