If you are going for a holiday abroad, then there is news of relief for you. The government has decided to extend the deadline for implementing Tax Collection at Source (TCS) by 3 months. The new rule of TCS will be implemented from 1 October 2023 instead of 1 July. Due to the increase in the deadline, till September 30, 2023, the old rule regarding TCS will remain in force.
Right now the rate of TCS is 5 percent. From October 1, it will increase to 20 percent. This means that if you buy a foreign travel package from an Indian operator, the operator will collect an additional 20% tax on the cost of the package from you.
Explaining the TCS rule, Abhishek Aneja, an expert in matters related to income tax and personal finance, says, “Suppose you buy a package of Rs 20 lakh to go to Dubai. To book this package, you will have to pay an additional Rs 40,000. The reason for this is the 20 per cent TCS levied on tour packages.
👉 Important changes w.r.t. Liberalised Remittance Scheme #LRS and Tax Collected at Source #TCS
👉 No change in rate of #TCS for all purposes under #LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to ₹7 lakh per individual per annum
— Ministry of Finance (@FinMinIndia) June 28, 2023
At the present rate, TCS of only Rs 10,000 will be levied on this foreign tour package. Apart from foreign tour packages, if you buy foreign currency from a forex dealer under the Liberalized Remittance Scheme (LRS), then you will also have to pay 20% TCS.
