TCS on Foreign Travel, Tour Packages, Remittance Rules 2020:  Planning to study abroad or enjoy an exotic holiday abroad? Here’s bad news. Your dream to study overseas or enjoy an exotic holiday abroad will soon get more expensive as per the provisions proposed by Finance Minister Nirmala Sitharaman in Budget 2020, says CA Amitabh Sethi. Now, new provisions to collect TCS (Tax collected at source) from April 1 have been proposed. As per the Budget proposals, TCS will be collected on:

  • Remittance under Liberalised Remittance Scheme (LRS) of RBI for amount exceeding Rs 7 Lakh in a financial year;
  • Sale of an overseas tour package through a tour operator.

The scope of Section 206 (C) of the Income-Tax Act, 1961 has been widened to include certain transactions within the ambit of TCS provisions:


“These provisions will result in greater funding requirements of financial goals for a large group of individuals by at least 5 per cent and will also increase the compliance requirements for those responsible for deducting and depositing TCS,” Sethi told FE Online.

TCS on Remittance

Sethi said that the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of money during a financial year to another country for investment and/or expenditure. According to the prevailing regulations, resident individuals may remit up to $250,000 in a financial year.

“There was no TCS earlier, but now if a resident individual has to send money abroad through an authorized dealer in excess of Rs 7,00,000 (either one time or in totality during the financial year) then the authorized dealer must collect TCS at the rate of 5 per cent at the time of remitting the money or at the rate of 10% if the remitter does not have a PAN /Aadhaar,” he said.

TCS on Tour Packages

The new provisions regarding TCS on overseas tour packages requires that a seller of overseas tour package shall collect TCS at the rate of 5 per cent or 10 per cent (if PAN /Aadhaar is not available) on total amount from the purchaser at the time of receiving the payment for the tour package and includes expenses for travel or hotel stay or boarding or lodging.

Can you minimise cash outflow?

If you are planning a foreign tour this year, or send foreign remittance over Rs 7 lakh this year, you can do that before April 1 to avoid paying an additional 5 per cent as TCS. Sethi said that from April 1, 2020, one needs to shell out additional funds for tour packages and foreign remittances (exceeding Rs. 7 Lakh in a financial year). However, the credit for the tax collected at source will be available to the person to offset income tax liability while filing ITR.

“Even as the credit for the taxes collected will be available to offset your income tax liability while filing your Income Tax Return, it will be certainly lighter on your pocket if you can plan your tour in advance and book it by March 31, 2020 and front load the remittances within the current financial year to save the additional cash outflow of 5 per cent,” Sethi said.