• June 15, 2023
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Beware, Foreign Travel is More Expenses from 1st July, TCS is now 5% to 20%

Foreign Travel is More Expenses from 1st July, TCS is now 5% to 20% TCS stands for tax collection at…

 Beware, Foreign Travel is More Expenses from 1st July, TCS is now 5% to 20%

Foreign Travel is More Expenses from 1st July, TCS is now 5% to 20%

TCS stands for tax collection at source. TCS at the rate of 20% of the total transaction amount from July 1, 2023 on Foreign Travel. TCS increase from 5% to 20% on foreign travel 2023.

TCS is a tax levied by the government on certain transactions involving foreign remittances. Here are some answers to the questions asked about TCS on foreign travel:

TCS increase from 5% to 20% on foreign travel 2023.

TCS increase on foreign travel 2023?

Yes, Budget 2023 has increased the TCS rate for foreign remittances under the Liberalised Remittance Scheme (LRS) from 5% to 20% (except for education and medical purposes) from July 1, 2023. This will apply to foreign trips, sending money abroad and other remittances except for education and medical purposes.

What is the TCS rate for foreign travel?

The TCS rate for foreign travel is 20% of the total transaction amount from July 1, 2023. This means if you book a foreign tour package from a travel agent that costs Rs 10 lakh, you have to pay an additional Rs 2 lakh as TCS (20% of Rs 10 lakh) to the travel agent.

How to avoid TCS on foreign travel?

There is no way to avoid TCS on foreign travel completely, but you can reduce it by booking your international air ticket by yourself (not as a part of a tour package), as it will not attract any TCS. You can also claim credit or refund of the TCS paid against your income tax liability for the year.

Can we claim TCS on foreign travel?

Yes, you can claim credit or refund of the TCS paid against your income tax liability for the year. For example, if you have paid Rs 2 lakh as TCS on a foreign tour package and your income tax liability for the year is Rs 3 lakh, you can claim credit of Rs 2 lakh and pay only Rs 1 lakh as income tax. Alternatively, if your income tax liability for the year is Rs 1 lakh, you can claim refund of Rs 1 lakh after paying Rs 2 lakh as TCS and Rs 1 lakh as income tax.

What is the TCS rate for foreign travel in Budget 2023?

The new TCS rate for foreign travel in Budget 2023 is 20% of the total transaction amount. This is a significant increase from the previous rate of 5% that was applicable until June 30, 2023. The higher TCS rate will apply to all foreign remittances under the Liberalised Remittance Scheme (LRS), except for education and medical purposes. This means that if you book a foreign tour package, send money abroad or invest overseas you will have to pay an additional 20% tax to the government. The TCS rate will also apply to international credit card transactions. The aim of this proposal is to discourage unnecessary foreign expenditure and to curb tax evasion by tracking the source and destination of the funds.

What is the new TCS rate for FY 2023-24?

The new TCS rate for FY 2023-24 for foreign travel is 20%, as announced in the Budget 2023-24 . This means that any foreign currency transactions made using an international credit card within the limit of USD 2,50,000 will be subject to a hefty TCS of 20%. Similarly, any foreign remittances under the Liberalised Remittance Scheme (LRS) of the RBI exceeding Rs 7 lakh in a financial year will also attract a TCS of 20%, except for education and medical purposes which will have a TCS of 5%. Furthermore, any overseas tour packages purchased from a travel agent will also have a TCS of 20% applied to them. This is a significant increase from the previous TCS rate of 5% for foreign travel and remittances, which was applicable until June 30, 2023. The new TCS rate is expected to discourage unnecessary foreign expenditure and encourage domestic savings and investments.

How much foreign remittance can be taken without TCS?

There is no limit on how much foreign remittance can be taken without TCS, but if the amount exceeds Rs 7 lakh in a financial year, then TCS will be applicable at the rate of 20% on the amount exceeding Rs 7 lakh. For example, if you remit Rs 10 lakh in a financial year, then TCS will be applicable on Rs 3 lakh (Rs 10 lakh – Rs 7 lakh) at the rate of 20%, which is Rs 60,000.

How can we avoid 5% TCS on foreign remittance?

You cannot avoid 5% TCS on foreign remittance completely, but you can reduce it by remitting money for education or medical purposes, as they are exempted from the increased TCS rate of 20% and will continue to attract only 5% TCS. You can also claim credit or refund of the TCS paid against your income tax liability for the year.

What is section 206C(1G)(b) – TCS on selling of overseas tour package?

Section 206C(1G)(b) of the Income Tax Act is a provision that requires a seller of an overseas tour package to collect tax at source (TCS) at the rate of 20% of the total transaction amount from July 1, 2023 from the buyer. This provision was introduced in Budget 2023 to increase the tax collection from foreign remittances under LRS.

How do I claim my TCS refund on a foreign tour package?

You can claim your TCS refund on a foreign tour package by filing your income tax return for the year and claiming credit or refund of the TCS paid against your income tax liability for the year. For example, if you have paid Rs 2 lakh as TCS on a foreign tour package and your income tax liability for the year is Rs 1 lakh, you can claim refund of Rs 1 lakh after paying Rs 2 lakh as TCS and Rs 1 lakh as income tax.

 

Verdict: Foreign travel will become more expensive from July 1, 2023, due to the increase in the tax collection at source (TCS) rate for foreign remittances under the Liberalised Remittance Scheme (LRS) from 5% to 20% (except for education and medical purposes). This means that if you book a foreign tour package from a travel agent or buy foreign currency from an authorised dealer, you will have to pay an additional 20% of the amount as TCS. This will also apply to international credit card transactions. However, if you book your international air ticket by yourself (not as a part of a tour package), it will not attract any TCS. You can claim the TCS amount as a refund or adjust it against your tax liability when you file your income tax return.

No TCS on foreign remittances of up to Rs 7 lakh in a year, credit card forex payments won’t attract TCS

The government of India has recently announced some changes in the Tax Collection at Source (TCS) rules for foreign remittances under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI). The LRS allows individuals to send money abroad for various purposes such as education, medical treatment, travel, investment etc. up to a limit of $250,000 in a financial year. Here are some key points to know about the new TCS rules:

– The TCS rate for foreign remittances under the LRS has been increased from 5% to 20% by the Finance Minister Nirmala Sitharaman in the Budget 2023. This applies to all remittances except for education and medical purposes. The new TCS rule will come into effect from October 1, 2023 .
– The TCS rate for remittances for education and medical purposes will remain at 5% for amounts exceeding Rs 7 lakh in a financial year .
– The TCS rate will be 0.5% for remittances made through a financial institution such as a bank or an authorised dealer.
– The TCS will not apply to payments made by using international credit cards (ICC) during overseas visits up to Rs 7 lakh per financial year. This means that transactions through ICC on foreign trips will not be counted as LRS and will not attract TCS .
– The TCS is not a tax by itself but a collection mechanism to monitor the foreign remittances and correlate them with the income tax returns of the individuals. The TCS amount can be claimed as a refund or as a credit while computing the advance tax or the final tax liability of the individuals .

The new TCS rules are aimed at curbing tax evasion and black money generation through foreign remittances. However, they may also increase the compliance burden and the cost of sending money abroad for genuine purposes. Therefore, individuals should be aware of the implications of the new TCS rules and plan their foreign remittances accordingly.

FAQ on TCS increase on foreign travel 2023

 

Q: What is the TCS rate for foreign travel?

A: The TCS rate for foreign travel is 20% of the total transaction amount for booking overseas tour packages or remitting money abroad under the Liberalised Remittance Scheme (LRS) from July 1, 2023 . This does not apply to education and medical purposes.

Q: How to avoid TCS on foreign travel?

A: There is no way to avoid TCS on foreign travel unless the purpose of the remittance is education or medical. Even if you book your international air ticket by yourself, you will have to pay TCS of 20% on the foreign currency you purchase from an authorised dealer.

Q: Can we claim TCS on foreign travel?

A: Yes, you can claim TCS on foreign travel as a credit against your income tax liability for the same financial year. You will need to file your income tax return and report the amount of TCS paid along with your PAN.

Q: What is the TCS rate for foreign travel in Budget 2023?

A: Budget 2023 has increased the TCS rate for foreign travel from 5% to 20% of the total transaction amount from July 1, 2023.

Q: What is the new TCS rate for FY 2023-24?

A: The new TCS rate for FY 2023-24 is 20% of the total transaction amount for booking overseas tour packages or remitting money abroad under the LRS from July 1, 2023.

Q: How much foreign remittance can be taken without TCS?

A: You can take up to $250,000 per financial year as foreign remittance without TCS under the LRS, provided the purpose of the remittance is education or medical.

Q: How can we avoid 5% TCS on foreign remittance?

A: You cannot avoid 5% TCS on foreign remittance if the purpose of the remittance is not education or medical. The 5% TCS rate will be applicable till June 30, 2023, after which it will increase to 20% .

Q: What is section 206C(1G)(b) – TCS on selling of overseas tour package?

A: Section 206C(1G)(b) of the Income Tax Act, 1961, mandates that a seller of an overseas tour package shall collect tax at source at the rate of 20% of the total transaction amount from a buyer who purchases such package from July 1, 2023.

Q: How do I claim my TCS refund on a foreign tour package?

A: You can claim your TCS refund on a foreign tour package by filing your income tax return and reporting the amount of TCS paid along with your PAN. You will get a credit for the TCS amount against your income tax liability for the same financial year.

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