TCS Tax For International Travel

The TCS (Tax Collected at Source) for international travel is applicable as per Indian tax laws. The Tax Collected at Source is a type of indirect tax that is collected by the seller (in this case, a travel agent or operator) from the buyer (traveller) at the time of booking international tours, or other international services.

 

Here are the important details about TCS for international travel:

  1. TCS Rate for International Travel:
  • 5% TCS: For individuals who are traveling abroad for tourism purposes, the TCS rate is 5% of the total tour package cost.
  • 20% TCS: If the payment is made through foreign currency, the TCS rate increases to 20%, if the total bill value is more than 7 Lakhs.

The TCS is collected on the amount spent on the tour package, excluding GST.

TCS Applicability:

  • TCS is applicable on payments for foreign tour packages or international air tickets.
  • The TCS is applicable when the total payment exceeds ₹7 lakh for overseas travel. For payments below ₹7 lakh, the tax slab is 5%.

Exemption for Taxpayers:

  • If the traveller is liable to pay Income Tax and provides their PAN (Permanent Account Number) at the time of booking, the TCS will be adjusted against their total tax liability.
  • If no PAN is provided, the travel agency is required to collect higher TCS.

Refund and Credit:

  • The TCS amount collected will be reflected in the traveller’s Form 26AS and can be claimed as a credit against the traveller’s tax liability when filing income tax returns.
  • This means it is not an additional tax burden; it is essentially an advance payment toward your taxes.

Payment Methods:

  • TCS is applicable on the total transaction amount, including payments made via debit/credit cards, cash, bank transfers, or any other mode of payment.

Example:

  • If you book an international tour package costing ₹5,00,000, the TCS would be ₹25,000 (5% of ₹5,00,000).
  • If you pay via foreign currency, the TCS would be ₹50,000 (10% of ₹5,00,000).

Everything You Need to Know About TCS Tax for International Travel

When planning an international vacation, there are many factors to consider, from flight bookings and accommodation to the destination itself. However, in recent years, a new element has been added to the list — the Tax Collected at Source (TCS) for international travel. If you are planning to travel abroad, it’s essential to understand how this tax works and how it affects your travel expenses. Here’s a breakdown of the TCS tax for international travel and everything you need to know.

What is TCS (Tax Collected at Source)?

TCS is an indirect tax imposed on payments made by buyers, which is collected by the seller at the time of the transaction. The amount collected is then deposited with the government. In the context of international travel, this tax is levied on payments made for international tour packages or air tickets.

How Much is the TCS Tax for International Travel?

The government has set a 5% TCS rate on payments made towards tour packages or flight tickets for international travel. However, there’s an additional condition:

  • 5% TCS: When the payment is made in Indian Rupees.
  • 10% TCS: When the payment is made in foreign currency.

These rates apply to the total amount spent on the travel package or air ticket, excluding the GST. It’s mandatory to remember that this tax is levied only when the payment exceeds ₹7 lakh. If the total amount is less than ₹7 lakh, the TCS is not applicable.

How Does TCS Affect Your Tax Liabilities?

TCS (Tax Collected at Source) for international travel is essentially an advance payment toward your taxes. The TCS amount is collected by the travel agency at the time of booking, but it’s not an additional tax. Instead, it will be reflected in your Form 26AS and can be claimed as a credit when you file your Income Tax Return (ITR).

Here’s how it affects your tax liability:

  1. Advance Tax: TCS is treated as an advance tax payment. It reduces your total tax liability when you file your ITR.
  2. Tax Credit: The amount paid as TCS will be credited to your account and will offset the taxes you owe. If your total tax liability is lower than the TCS, you can claim a refund.
  3. PAN Requirement: Providing your PAN ensures the TCS is credited correctly. Without a PAN, a higher TCS rate (10%) will apply, increasing the amount you pay.

In short, TCS is a tax paid upfront that can be claimed back or adjusted against your tax liabilities when filing your returns.

 

How Can You Avoid Paying Higher TCS?

To avoid paying a higher TCS (Tax Collected at Source) rate, follow these steps:

  1. Provide Your PAN: If you are a taxpayer and provide your Permanent Account Number (PAN) while booking your international tour package or air tickets, the TCS rate will be 5%.
  2. Avoid Foreign Currency Payments: If you want to save on the higher TCS rate, make payments in Indian Rupees rather than foreign currency. Payments made in foreign currency attract a 10% TCS rate.

By ensuring that your PAN is provided and paying in Indian Rupees, you can avoid the higher 10% TCS rate and keep your travel expenses manageable.

 

Is TCS Tax Refundable?

TCS (Tax Collected at Source) is not refundable directly, but it can be adjusted against your total tax liability when you file your Income Tax Return (ITR). It is reflected in your Form 26AS, which is your tax credit statement. If your tax liability is lower than the TCS collected, you can receive a refund for the excess TCS amount.

In short, TCS is not refundable upfront, but it can reduce your overall tax liability or result in a refund when you file your tax returns

 

Final Thoughts

TCS for international travel might seem a bit complicated, but it’s simply an advance tax, not an extra cost. By providing your PAN details when booking, you can easily manage the TCS and claim it as a tax credit when filing returns.

Before booking your international trip, check with your travel agent about the TCS applicable and ensure it is correctly shown in your tax records. By this way, you can enjoy your vacation without worrying about taxes.

Plan your international trip with Fly for Holidays and experience the best in travel, while staying informed about the taxes and fees involved. Happy traveling!

Note:

  • The TCS collected by the travel agent or tour operator will be deposited with the government, and you can claim the credit against your income tax when filing your returns.