New TCS on foreign travel: How 20% TCS from next month will affect your foreign travel, what you need to know

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From October 1, 2023, tax at source (TCS) will be collected at 20% on purchases of foreign currency under LRS (except education and medical tours) and international tour packages exceeding the limit of Rs 7 lakh in a financial year.

TCS on foreign exchange purchases/remittances is adjustable in your tax return, and you still have time to avoid it. Learn how BookMyForex can help you in this regard.

If you are planning to travel abroad, be prepared to set aside up to 20% of your money for tax collection at source (TCS). Yes, you read that right. According to Budget 2023, foreign tour packages and purchases of foreign exchange worth more than Rs 7 lakh in a financial year will be subject to an increase in TCS (tax collected at source) rate by 20 per cent from the existing 5 per cent starting October 1. . 2023. The good thing is that foreign exchange transactions of less than Rs 7 lakh in a financial year will not attract tax collection at source (TCS).

How will 20% TCS from next month affect your travel?

There will be a significant change in TCS rules from October 1, 2023, which will see a huge increase from the current 5% to 20%. This has resulted in a 15% increase in spending by individuals seeking international travel packages

Rikant Pitti, co-founder of EaseMyTrip, said that in light of these changes, travelers are advised to:

1) Make sure that the cost of their travel package does not exceed the limit of Rs 7 lakh per person.

2) We highly recommend careful and strategic travel planning to maximize budget efficiency.

“For packages worth Rs 7 lakh or less per person per financial year, 5% TCS rate will continue to be applicable. This usually covers the costs associated with annual foreign holiday trips,” he said.

What does the 20% TCS rule mean?

Any payment exceeding ₹7 lakh per annum in foreign lands through international credit and debit cards will be subject to TCS levy at the rate of 20 per cent with effect from October 1, 2023.

Can taxpayers claim back ‘20% TCS’?

Yes, taxpayers can claim TCS refund in your income tax return. “Individuals will see a higher bill on their card, with funds potentially blocked for several months until a return is filed/refund is claimed and the tax already collected is adjusted Is. Taxpayers will now have to keep track of these TCS entries in their Form 26AS,” said Archit Gupta, Founder and CEO, Clear.

The Union Budget 2023-24 had increased TCS rates on foreign tour packages and funds remitted under LRS (other than education and medical purposes) to 20% from the current 5%.

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