Complete Guide to TCS when Remitting Foreign Travel Expenses from India

Overseas tour packages are an easy way for Indians to travel overseas. Often the company takes care of all requirements like booking travel tickets, hotel rooms, dining, and sightseeing. If your overseas tour package booking requires you to send money abroad, you may need to account for Tax Collected at Source (TCS) regulations.

The government of India has introduced TCS on overseas tour package remittances, or transfers. Learn more about how TCS works on foreign travel and how it may impact your upcoming trip.

What is TCS on Foreign Travel?

For the most part, TCS on foreign remittances applies to all money transfers that exceed INR 7,00,000 made during a financial year under the Liberalised Remittance Scheme. The TCS rates differ for varying purposes, such as medical expenses, education and gifts.

Most overseas remittances below INR 7,00,000 in a financial year do not require a TCS payment, however, overseas tour packages do not qualify. TCS is applicable on all remittances for overseas tour packages, but the rate varies for amounts above INR 7,00,000. If you are paying for your own holiday and not to a company, then you only have to pay TCS on the amount above INR 7 lakhs. ²

The tax withheld from foreign travel exopenses is mistakenly referred to as TDS, but it is actually a TCS. TCS refers to tax collected at the source, whereas TDS represents tax deducted at the source.

Customers must note that TCS on foreign travel differs from GST, as well as the tax charged on travel services, money transfer services and the like. TCS is collected in addition to any GST on services.

What makes TCS unique is that you may claim a refund of the amount when filing your ITR. For example, if the TCS paid in 2024 is more than your tax liability for the financial year, you can claim an appropriate refund.

TCS Rates on Foreign Travel from India

The Ministry of Finance lists out the TCS rates on overseas tour program packages under LRS, effective from 01 October 2023:³

An overseas tour package is defined as offering a visit to any country outside India and including expenses for travel, accommodation (with or without food), and similar expenditures. The purchase of only international travel tickets or only hotel accommodation is not covered within the overseas tour program package definition.

TCS is only paid on money transfers or purchases made using debit or Forex cards. Payments made using international credit cards are outside of the LRS, so there is no TCS on credit card transactions.

How to Pay TCS for Foreign Travel

Authorised dealers such as travel agencies, overseas tour operators, and money transfer service providers are responsible for collecting TCS when booking an overseas tour package. TCS applies even if you book your overseas tour package from domestic online travel service providers such as Yatra.com, MakeMyTrip.com, and EaseMytrip.com, and if you pay in Indian Rupees.

Keep in mind that the law has not clarified whether foreign websites should collect TCS from Indian customers when booking overseas tour packages.⁴

How to check for TCS deducted

When TCS is deducted, the amount is deposited with the Income Tax department. The following documents can help you determine the amount of TCS paid to help you file your ITR accurately.⁵

1. Form 27D or TCS Certificate: The overseas tour service provider must provide the details of the TCS collected and paid to the government by issuing a TCS certificate or Form 27D to the customer.
2. Form 26AS: The income tax e-portal has this form detailing all TCS and TDS paid to the government on your account.
3. Other statements: You can view or download AIS and TIS (Annual Information Statement or Tax Information Statement) from the income tax e-portal to know about the TCS deducted from your account.

Keeping track of the TCS paid and your receipts from travel bookings can help make filing a claim later easier.

How to claim TCS Refund on Foreign Travel

TCS is not a fee but a tax paid to the government. Since it is not an additional income tax, you can adjust the TCS paid when computing your overall tax liability for the year.

Is TCS on Foreign Travel Refundable?

The TCS you pay for international money transfers or overseas tour packages is adjusted against your income tax return. Depending on your tax liability, you can claim the appropriate refund. It is fully refundable if you have no tax liability.

If you have paid for travel and then decide to cancel the trip, you may be able to get the deducted TCS back if you cancel soon after making the booking.

Step-by-step guide for claiming TCS

Here are the steps for how to claim TCS on foreign travel:⁶

1. Collect your TCS certificate: To find out the details of TCS deducted from your account and deposited with the income tax department, collect Form 27D from the service provider.
2. Verify with your Form 26AS: Visit the income tax e-portal and download your Form 26AS for the financial year. Verify it with the details provided in Form 27D.
3. Keep other documents ready: Please keep your tickers, receipts, and other documents ready before filing your ITR.
4. File your ITR: Please include the TCS amount in the relevant column of the ITR and provide details of your remittances and TCS deductions from Form 27D.
5. Get your refund: The IT department determines your tax liability and refunds any excess tax collected or deducted from your account. You get the refund to your registered bank account.

How to Avoid TCS on Foreign Travel

While avoiding TCS is not advisable, there may be steps to take to help make transfers easier:⁷

• Alternative to overseas tour package: The government specifically defines overseas tour packages to include two of the following expenses.⁸ International Travel Ticket, Hotel Accommodation (with or without food), and any other expense of a similar nature. If you split up your package and book your travel tickets and hotel accommodation separately, your tour may not be considered an overseas tour package. This may help keep your total transfer amount below the TCS threshold.

• Share travel expenses: The TCS threshold applies per sender. Therefore, you can share your travel expenses between different family members and reduce your overall TCS liability.

For instance, one person can book the flight tickets, and another can pay for the hotel accommodation or other charges. Under such circumstances, your individual TCS liability may become zero because the individual expenses for tickets and accommodation are less than INR 7,00,000.

• Book through foreign websites: As of now, foreign websites do not collect TCS from their customers. However, before you book make sure to check the legitimacy of the website and read through customer reviews to determine if the website is safe.

• Use credit cards: An international credit card for overseas trip expenses can help reduce TCS. However, international credit cards can come with interest charges and possible international transaction fees. Keep this in mind when considering whether to use credit cards.