Fact Check: Can Banks Verify If You Have Spent Less Than Rs 7 Lakh A Year?

Trinamool Congress spokesperson Saket Gokhale has claimed that people will be charged 20 per cent tax collected at source, no matter how much they spend abroad.

"The new 7 lakh exemption announced foreign transaction tax is an eyewash. Banks cannot verify whether you have spent less than 7 lakhs a year. Ergo, you will be charged 20 per cent TCS on every transaction. Modi government and BJP are masters at misleading people," Gokhale had said in a tweet.

The fact check wing of the Press Information Bureau (PIB) called out this claim and said that it was false.

The government on Friday had announced that no tax will be charged on overseas spending of up to Rs 7 lakh a year using debit or credit cards. Friday's announcement was a follow up to the public queries on the Centre's earlier announcement on charging TCS on all spending.

"Claim: Banks cannot verify whether you have spent less than ₹ 7 lakh in a year. This claim is false. The Liberalised Remittance Scheme (LRS) spends of an individual are compiled and monitored by the RBI (Reserve Bank of India)," PIB said in a tweet.

Gokhale was granted bail by a Gujarat court on May 6 in connection with a money laundering case.

He faces allegations of money laundering linked to a crowd-funding initiative. He had been arrested by the Enforcement Directorate in January this year.

The government had earlier this week brought overseas credit card spending under the LRS scheme. This meant that any spending using a credit card abroad would attract 20 per cent tax from July 1 onwards. Debit card spending was already part of the LRS.