Foreign Travel and 20% TCS: Understanding The Impact
Are you planning to fly abroad?
Do you know that from October 2023 onwards, the government will impose 20% TCS on your next trip, which was initially 5% until now?
Let’s break it down for you and make you understand what TCS is and how it works.
TCS stands for Tax Collected at Source, and it is a tax imposed by the government, which is collected by the seller from the buyer at the time of purchase.
This TCS can later be remitted at the time of filing the RTR.
The government has taken this initiative to collect significant revenue, which is necessary for increasing domestic investments while reducing the unnecessary flow of foreign exchange.
This move will eventually stabilise the country’s economy and financial position as well.
Until now, the TCS on overseas travel was 5%, which meant that whenever you book a tour package, you have to pay the total amount of the package along with GST and 5% TCS, which could be remitted while filing the RTR.
In the new budget this year, the government has increased the tax collected at source from 5% to 20%, meaning a 15% hike.
However, if your total remittance amount does not exceed INR 7 lakhs, then only 5% TCS will be levied, but if your annual remittance exceeds the limit, you will be charged a TCS of 20% from October, 2023.
To simplify it for you, let’s take an example. Suppose you are travelling to Bali, and Bali Tour Packages range around 90000 INR. Till September 30th, 2023, the amount you need to pay, including TCS, would be 94500 INR, which means an extra 4500 INR has to be paid by you in the name of TCS.
Whereas, if you book the tour package after 30th September and your annual foreign remittances have already exceeded the INR 7 lakh threshold, then the total cost you would be paying will be 108000 INR for the entire package, which means that you would be paying a total of 18000 INR extra in the name of Tax Collected at Source or TCS. (20% TCS is only applicable if your annual foreign remittance exceeds INR 7 lakhs, from October)
Yes, you can still claim it, but that doesn’t change the fact that your money will be locked until you claim it. Besides, every penny you save counts when you are already spending so much money on an International trip.
It’s bad enough that International trips are expensive; now you must pay an additional cost for it as well.
That is a bummer, isn’t it?
How about we tell you that you can avoid the fuss of 20% TCS because you still have time for that?
Let us tell you how you can do it by being a little smarter than the rest of the people sulking over paying TCS.
Plan Your Trip With WanderOn
The best way to avoid paying 20% TCS is to book your International trip with Wanderon, India’s coolest travel community, before October 1st, 2023.
Since the imposition of 20% TCS will be levied from the month of October, you still have a lot of time to book your next international trip. How will that help?
Well, if you book before October, you will only be paying 5% TCS on your International trip, and the best part about it is that you can travel with this booking throughout the financial year, March 31st, 2024.
Now that’s some good news in the middle of the blues, right?