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Travelling Abroad Might Get Expensive Under This New TCS Provision

Making an international trip is about to get rather expensive from the 1st of April, 2020. While buying an overseas travel package foreign currency above INR 7 Lakh, an individual will be liable to a tax collection at source (TCS). The purchase of an overseas tour package and remittances of funds overseas, if not becoming expensive, will increase the total outgo for individuals. 

The Budget of 2020 has proposed to amend section 206C to levy TCS on overseas remittances and for sale of an overseas tour package, by increasing the collected TCS to the rate of 5 per cent. As per the new rule under Section 206C of the Income Tax Act, an authorised dealer receiving an amount of INR 7 lakh or more in a financial year for remittance out of India under the LSR or RBI, will be liable to collect TCS at the rate of 5 per cent.

Overseas tour programs, studying abroad and any travel activity outside India will fall under the new provision. 

Similarly, The TSC will be at a rate of 10 per cent if PAN or Aadhaar is not made available to the authorised dealer or the tour package seller. Further, a seller of an overseas tour program package who receives any amount from any buyer shall be liable to collect TCS at the rate of 5 per cent. Overseas Tour programs here mean any tour package which offers a visit to a country or countries outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expense of similar nature.

Even though it is not a tax and will not make your foreign travel experiences expensive directly, the outgo will increase. Studying overseas or going to an international vacation will get impacted. In short, any tour package purchase by any person for any amount for outside India, one will have to pay 5 per cent to 10 per cent as the case extra which credit will be available to one while filing for Income Tax returns.

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