With the recent amendment to the Finance Act 2023 overseas tour package will attract 20% Tax Collection at Source (TCS). Before this amendment the rate was 5% which has now been increased. This has been made effective Jul 1, 2023. TCS on overseas tour packages came under the spotlight recently after the government deemed it fit to bring international spending via credit cards when travelling abroad under the RBIs’ Liberalised Remittance Scheme (LRS), and hence, under the TCS.
Also, if you make international flight and hotel bookings yourself, then TCS won’t apply until one crosses the Rs Seven Hundred Thousand threshold set for both debit and credit cards. This is for bookings made in foreign currency, not in INR. In the latter case, no TCS applies.
So the question arises is what happens if a foreign tour package is booked what should be the TCS. As it stands currently, we are of the opinion that TCS is not applicable till one crosses the limit of Rs. Seven Hundred Thousand set under the RBI’s Liberalised Remittance Scheme (LRS), and hence under the TCS.
