Key Highlights
- A new 20% TCS rule affects international travel expenses from October 1, 2023.
- To reduce TCS, book flights, hotels, and sightseeing separately.
- TCS can be offset against income tax or refunded if you have no tax liability.
f you're planning an international journey, be prepared to face increased upfront costs due to the new Tax Collected at Source (TCS) rule. Starting from October 1, 2023, this rule will apply to overseas tour packages costing more than Rs 7 lakh in a financial year. However, there are ways to minimize this additional cost. In this article, we'll explore the new TCS rule's details and provide four essential tips to help you reduce your TCS expenses during your next international adventure.
Understanding the New TCS Rule
The Ministry of Finance has clearly defined what constitutes an overseas tour package under the new TCS rule. In this section, we'll explain the specifics of the rule and who is responsible for collecting TCS, whether you book online or offline.
Reducing TCS with Separate Bookings
To avoid the higher TCS rate on overseas tour packages, consider booking your flights, hotels, and sightseeing separately instead of bundling them as a tour package. Learn how this approach can save you money.
Utilizing the Rs 7 Lakh TCS Threshold
TCS isn't limited to tour packages; it also applies to remittances from India. Discover how you can take advantage of the Rs 7 lakh threshold to minimize TCS when traveling with family or in a group.
TCS on International Credit Card Transactions
If you're worried about TCS on your international expenses, we'll explain the exemption on international credit card transactions and how you can make the most of it while avoiding additional tax liabilities.
Independent Thresholds for TCS and LRS
Understand the distinction between the threshold for TCS under the Liberalized Remittance Scheme (LRS) and the threshold for overseas tour packages. We'll provide examples to clarify the concept.
Booking Through Foreign Websites and TCS
Many travelers book international trips through foreign websites. We'll explore whether such bookings are subject to TCS and provide tips for staying safe when using international platforms.
TCS Is Not an Additional Tax
Finally, remember that TCS is not an extra income tax. Find out how you can adjust TCS deductions against your tax liability or receive a refund if you have no tax liability, while also understanding the potential cash flow implications.
By the end of this article, you'll be well-equipped to plan your international trip and minimize the impact of the new TCS rule on your expenses.
