Starting Oct 1st 2023, purchase of forex under LRS (Except Education and Medical visits) & international tour packages will be subject to tax collected at source (TCS) of 20% over a threshold of Rs 7 lakhs in a financial year.
TCS on Forex purchase/Remittance is adjustable in your tax returns, and you still have time to avoid it altogether. Find out how BookMyForex can help you in this regard.
If you are planning a trip abroad, be prepared to set aside up to 20% of your money for tax collected at source (TCS). Yes, you read that right. According to the Budget 2023, the purchase of overseas tour packages and forex worth more than 7 lakhs in a financial year will be subject to an increase in TCS (Tax Collected at Source) rate of 20 percent from the current 5 percent, starting October 1st 2023. The good thing is that Forex transactions below Rs 7 lakh in a financial year will not be subject to Tax Collected at Source (TCS)
How will 20% TCS from next month impact your travel
Commencing from October 1, 2023, there will be a significant alteration in TCS regulations, witnessing a steep rise from the existing 5% to an elevated 20%. This results in a 15% escalation in expenses for individuals seeking international travel packages
Rikant Pittie, Co-founder, EaseMyTrip said that in light of these changes, travelers are advised to:
1) Ensure that the cost of their travel package does not exceed the 7 Lakh threshold per individual.
2) We highly recommend meticulous and strategic trip planning to maximize budget efficiency.
“For packages valued at or under 7 lakh per financial year per individual, the 5% TCS rate will remain applicable. This typically encompasses the costs associated with an annual overseas leisure tour,” he added.
What does 20% TCS rule mean?
Any payments done in the foreign land exceeding ₹7 lakh a year through international credit and debit cards will be subject to TCS levy at the rate of 20 per cent effective 1 October 2023.
Can taxpayers claim ‘20% TCS’ back?
Yes, taxpayers can claim a TCS refund in your Income Tax Return. “Individuals will see a higher bill on their cards, potentially blocking money for several months until a return is filed/refund is claimed and tax already collected is adjusted. Taxpayers may now have to keep track of these TCS entries in their Form 26AS,” said Archit Gupta, Founder, and CEO, Clear.
The Union Budget 2023-24 had hiked TCS rates to 20%, from 5% currently, on overseas tour packages and funds remitted under LRS (other than for education and medical purposes).
