Corporate Card Loopholes: High Net Worth Individuals Bypass Foreign Remittance Limits
Corporate Card Use Amid Liberalised Remittance Scheme
High net worth individuals have found a way to capitalize on corporate cards for personal expenses during their overseas travels. This method potentially allows them to avoid exceeding the annual foreign remittance limit set forth by India's Reserve Bank of India.
The Liberalised Remittance Scheme Impact
Under the Liberalised Remittance Scheme (LRS), individuals can remit up to $250,000 per year for various purposes, including investments in stocks and properties abroad. However, with the government considering changes that could include corporate card expenses under LRS limits, many high net worth individuals are worried about future spending restrictions.
Potential Regulatory Changes and Corporate Responsibilities
With discussions on incorporating tax collected at source (TCS) for credit card expenditures exceeding 7 lakh, banks are expected to address these concerns in upcoming meetings with the RBI. The inability to segregate personal expenditures from corporate spending on these cards is creating challenges for compliance and regulatory oversight.
Future Considerations for High Net Worth Individuals
As regulations tighten, high net worth individuals must brace for potential scrutiny of their overseas spending. Striking a balance between corporate and personal finances will become increasingly crucial to ensure compliance with forthcoming regulations.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.