Foreign travel loans, credit options record huge demand

Many finance companies are offering the option of paying through equated monthly instalments

By H. P. Ranina

Published: Sat 3 Sep 2022, 5:05 PM

Question: My son who is working in India wants to go abroad for a holiday. He hardly has any savings as he has just started working but he wants to take a loan. Do banks or finance companies give loans for foreign travel? I am not so sure.

Some well known travel companies are themselves giving short term credit to their customers under ‘Buy Now, Pay Later’ scheme. Many young professionals are availing of this loan for foreign travel.

Banks and financial institutions also give credit facilities to their known customers by tying up with fintech companies. The repayment of loans is spread over three to thirteen monthly instalments. The average transaction size for an international travel loan is currently Rs150,000.

Some travellers use their credit card option for financing their foreign travel. Many finance companies are offering the option of paying through equated monthly instalments. In the last one year, foreign travel loans and credit options have recorded a seven fold increase

When my relatives take treatment in a hospital, they generally spend a substantial amount in cash both for settling hospital bills and for the purchase of medicines. Is there any risk involved as far as Government authorities are concerned, especially from tax and foreign exchange regulators?

All hospitals and medical institutions in India are required by the tax authorities to obtain the permanent account number when a patient is admitted. The tax authorities have recently found that this statutory requirement is not being complied with as hospitals take the stand that in many cases the patient is admitted on an emergency basis and therefore cannot produce the required document. As a result these institutions are being investigated and records of patients have been collected. Authorities under tax laws are taking these lapses very seriously. The tax authorities have the power to treat as concealed income any cash expenditure incurred that cannot be justified by the amount of income disclosed in the tax returns.

Such unexplained expenditure is treated as tax evaded income under section 69-C of the Income-tax Act and where the source of that expenditure cannot be explained having regard to the income disclosed in the return of income, the unexplained expenditure is taxed at the flat rate of 60 per cent under section 115-BBE. The tax authorities claim that they have gathered voluminous information and built up a data bank of those who are suspected of tax evasion as a result of spending large amounts in cash. Hence, it is best to pay hospitals, hotels, etc. through debit/credit cards in order to avoid any adverse action.

The number of electric vehicles, both cars and two wheelers, is going up by leaps and bounds. However, concerns remain about the quality of batteries used for these vehicles. Are any safeguards being taken to prevent fire and other accidents?

The Road Transport Ministry is coming up with mandatory standards for battery components. Guidelines are being issued for testing of cells and other components. Companies failing to comply with these standards and regulatory norms will be visited with penalties. The standard and testing protocols are to be notified simultaneously for both two and four wheeler electric vehicles. Vehicle manufacturers will be bound statutorily to use only standard compliant batteries. In order to ensure that these guidelines and norms are complied with, the investigating authorities will obtain random samples of finished batteries from factories to ascertain whether the requisite standards are complied with. Hence, stringent measures are being taken to minimize the possibility of accidental fire or mishaps.

H. P. Ranina is a practicing lawyer, specializing in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper’s policy.

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