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Understanding TCS on Overseas Tour Packages

By amending Section 206C of the Income Tax Act, the Finance Bill has imposed a higher TCS (Tax Collected at Source) on foreign travel. The amendments have come into effect from October 1, 2023. For an upcoming international trip, it is crucial for the travellers and tour operators to acquaint themselves with this new regulation and understand the complexities of all the changes made in the provisions covering TCS on LRS and the purchase of overseas tour program packages. Let’s examine some aspects and understand the implications related to the New TCS on foreign travel in detail.

– Arjun Akruwala

The travel and tourism industry in India is undoubtedly passing through a horrendous phase since the last few years. A simple business of helping travellers book air tickets, hotels, tour packages, visas and ancillary services has been turned into a complex web of riddles since the introduction of GST and subsequently TCS. The industry barely survived the aftermath of COVID-19 and the government announced the levy of TCS. In 2021-22, a total of USD 19.61 billion was remitted under LRS, up from USD 12.68 billion in 2020-21. In 2022-23, it rose to more than USD 24 billion and this has caught the eye of the government.

If you are planning to go on an international trip and any booking is done, offline or online, for overseas tour packages of more than Rs 7 lakh in a financial year, you have to pay TCS at 20 per cent from October 1, 2023. If the foreign tour packages cost up to Rs 7 lakh, TCS will be levied at 5 per cent.

Provisions relating to Tax Collection at Source (TCS) on Foreign Tours as introduced by Finance Act, 2020.

The modification of Section 206C of the Income-tax Act, 1961, was aimed at collecting higher TCS on overseas package tours, as it is assumed that people make high-value remittances, but their tax returns do not reflect proportionate income tax payments. TCS is an additional tax collected by sellers from buyers at the time of sale, which is then remitted to the government account. These provisions would substantially affect international travel from India.

TCS is applicable only on Overseas Tour Package

‘Overseas tour program package’ is defined as any tour package that offers a visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of a similar nature or in relation thereto. To qualify as an ‘Overseas Tour Program Package’, the package should include at least two of the following: –

International travel ticket,
Hotel accommodation (with or without food)/boarding/lodging,
Any other expenditure of similar nature or in relation thereto.

FAQs for conceptual clarity of the provisions are mentioned here under

Whether the provisions also apply to travel agents or booking of the hotel or stay individually and not providing any tour package.

The intention of the legislature is clear that TCS applies only in case of the sale of a “package tour” which includes travel ticket expenses, hotel stay or sightseeing, entry tickets or boarding or lodging, etc. An individual sale of travel tickets, hotel booking, stay, and food is not covered under this definition.

Whether the provisions also apply to the entire cost of the package even if part of the package covers a domestic tour and the rest of the part is covered under an overseas tour?

Suppose a Mumbai buyer purchases a tour package which includes first visiting North India and after visiting North India proceeding to visit any overseas destinations.

In this case, two options are available with the seller. The first option is to split the invoice of the tour package into the domestic tour and overseas tour separately whereas the second option is TCS would be levied on the entire package of the tour under a single invoice.

TCS is liable to be paid by the buyer of the overseas tour package to the seller, whereas this provision does not apply when the buyer deducts the TDS.

E.g., ABC Ltd (corporate client) approached XYZ Tourism Ltd. (Seller) to organise an off-site tour for employees, which includes training as well as sightseeing out of India. Let’s assume that ABC Ltd. is liable to deduct TDS on this transaction, then in that case XYZ Tourism Ltd shall not be liable to collect TCS on selling this package tour.

Whether payment through an overseas credit card would be counted in LRS?

As announced in the press release dated 28th June 2023, the classification of the use of international credit cards while being overseas, as LRS is postponed. Therefore, No TCS shall be applicable on expenditure through International Credit Cards while being overseas till further order.

Whether the threshold of Rs 7 lakh, for TCS to become applicable on LRS, applies separately for each remittance through different authorised dealers? If not, how will the authorised dealer know about the earlier remittances by that remitter through some other authorised dealer?

It is clarified that the threshold of Rs 7 lakh for LRS is qua-remitter and not qua-authorised dealer. This is clear from the first proviso to sub-section (1G) of section 206C of the Act. Since the facility to provide real-time updates of remittances under LRS by remitter is still under development, it is clarified that the details of earlier remittances under LRS by the remitter during the financial year may be taken by the authorised dealer through an undertaking at the time of remittance.

What is the time to collect TCS?

TCS is to be collected on earlier of the following two events:

Amount debited by the seller i.e., on the Date of Invoice
At the time of receipt of the amount

Documents required to be maintained for compliance of the TCS provisions

Separate Invoicing/Cost Center to be developed for Domestic and International Tours.
Separate records need to be maintained for Domestic and International Tours.
Details of the PAN/Aadhar card need to be collected for International Tour buyers.
When a buyer makes advance payment for an international tour then in that case receipt voucher should also reflect TCS on such advance.
The invoice for the International Tour should also contain details of TCS collected from the buyer along with PAN/Aadhar Number.
Auto reconciliation of the TCS amount should be implemented for buyers who make payments in different tranches.
The Accounting system as well as the billing system has to be modified to incorporate TCS provisions.

Lastly, TCS can be taken as a challenge or as an opportunity as the tour operators who are not compliant will be facing a very difficult time going forward and thus this will create opportunities for the compliant and law-fearing tour operators to gain more market share. Further, the mammoth task of convincing the government regarding these draconian provisions should also not halt.

About the Author: Arjun Akruwala, a CA and LLB professional, specialises in Indirect Taxes. For the past six years, he has played a pivotal role at TAFI, serving as the official GST and TCS consultant. He is an experienced and respected travel trade industry taxation subject expert and has delivered more than 50 lectures at regional TAFI and other professional forum meetings.

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Govt clarifies how tcs will be applicable on flight tickets, hotel bookings during international trips, hostel expenses, other foreign remittances.

Earlier this week, the ministry said that there will be TCS on foreign remittances of up to Rs 7 lakh per financial year. Further, it also added that the increased rates TCS will come into effect from October 1, 2023

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Foreign travel to get expensive from July 1! Tax collected at source to jump from 5% to 20%

As per the announcement made in budget 2023, the tax collected at source (tcs) rate on foreign remittances, including bookings for tour packages, will rise sharply from 5 per cent to 20 per cent of the total transaction amount from july 1, 2023..

Updated May 18, 2023, 7:41 PM IST

Due to the extended hiatus caused by Covid-19 and the desire to escape the scorching weather, travel bookings have surged by 30 per cent to 40 per cent this season. However, the surge can also be attributed to the impending increase in foreign travel expenses, which is set to take effect from July 1, 2023. As per the announcement made in Budget 2023, the Tax Collected at Source (TCS) rate on foreign remittances, including bookings for tour packages, will rise sharply from 5 per cent to 20 per cent of the total transaction amount from July 1, 2023. This means if the air travel costs Rs 50,000, the corresponding TCS amount would be Rs 10,000, which is equivalent to 20 per cent of the air travel cost.

Not only foreign tour packages but 20 per cent TCS rule also applies on credit cards on international transactions, which means even direct booking would come under the ambit of 20 per cent TCS, as per finance ministry circular issued on May 16. According to PTI report the ministry on May 16 notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, to include international credit card payments in the LRS.

Also WATCH: India’s automobile sector: Insights On Growth, CV & PV Sales, Hero Vs Honda, Maruti, Hyundai Vs Tata Motors, M&M & more

“The rate of TCS on LRS remittances including foreign travel bookings is all set to increase four-fold from 5 per cent to 20 per cent effective 1st July 2023. TCS at 5 per cent on LRS remittances was first introduced in October 2020, and it has already led to a significant loss of business for domestic travel and tour agents (DTAs) as customers now prefer booking overseas travel services with Global Travel Agents (GTAs), who have been escaping TCS compliance and hence can offer better pricing on their platforms. The proposed four-fold rate increase will widen the pricing gap as the upfront cost for travellers will increase further on DTAs, motivating them to book with GTAs," Mohit Kabra, Group CFO, MakeMyTrip told Business Today.

Investments and expenditures abroad are made by using the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI), which is available to all resident Indians. Through this scheme, an individual can remit up to $250,000 per financial year for such transactions. Once the rule comes into play Indian travellers will be subject to a 20 per cent tax collected at source by authorized banks or travel agents when making payments for international travel bookings, including airfare, hotel accommodations, or tour packages.

"The tax collected at source (TCS) shall be accumulated as an aspect of the payment and subsequently transmitted to the government. It is imperative for Indian travellers to take into account these supplementary financial obligations while strategizing their global adventures. The imposition of a 20 per cent TCS is likely to augment the overall expenditure incurred by individuals on their travel. However, the traveller can claim TCS credit while filing their tax return. So no overall impact will be seen," says Rikant Pittie, Co-founder, EaseMyTrip.

The new Tax Collected at Source (TCS) rules will also apply to transactions made with credit cards, added Pittie.

Undoubtedly, it is anticipated that foreign travel will incur greater expenses commencing July 1st, 2023, as a result of the enforcement of the 20 per cent TCS on foreign remittances for diverse objectives, including travel abroad. "It is mandatory for Indian globetrotters to take into account this supplementary financial obligation while devising their overseas excursions. The imposition of a 20 per cent TCS is likely to augment the immediate total expenditure incurred by individuals on their travel. However, there will be no difference in their travel costs as they can claim it while filing their return," says Pittie.

#Foreign travel
#Foreign travel expensive
#TCS on foreign remittances

TDS at 5% on foreign tour packages, remittances abroad

The Budget 2020-21 has mandated a 5 per cent tax collection at source for remittances over Rs 7 lakh.

Listen to Story

TDS at 5% on foreign tour packages, remittances abroad

Money flowing out of India is being taxed with tax deduction at source added on services like foreign tour packages and remittances as the outgoing funds flow is sought to being taxed.

Mohandas Pai, Chairman, Aarin Capital has criticised the TDS on foreign remittances. He said: "This is very wrong; Why is there a Tax on our own tax paid money when we remit? Where is ease of living?."

Directionally, it looks like that money flowing out of India is being taxed in the form of remittances or travel. Some people have said that they will make the remittances for education by March 31 as the provision kicks in from April 1.

A new TDS provision has been introduced on foreign remittance. Authorized foreign exchange dealer receiving an amount of Rs 7 lakh or more in a financial year for remittance out of India under the LRS scheme of the RBI shall collect TCS (tax at source) of 5 per cent from the buyer, being a person remitting such amounts out of India. In the case of non PAN/Aadhar cases the rate is 10 per cent.

LRS is used for sending money for children studying abroad, buying property abroad and buying stocks listed in exchanges abroad. The LRS is limited to $250,000 per year per person. ON sending more than Rs 7 lakh year, 5 per cent of that amount will be deducted by the FX dealer and paid as TCS to the Income tax department.

A TDS provision has been introduced on tour packages also. The seller of overseas tour packages shall collect TCS of 5 per cent from the buyer.

The provision will not apply in case the operator is liable to deduct tax at source under any other provision of the act and the amount has been deducted. It will also not apply if the buyer is the government or any another person notified by the government

There is no lower limit on this provision. Travel operators are cribbing that this will hurt their business. Published By: Koustav Das Published On: Feb 4, 2020 --- ENDS ---

Home » Blog » [FAQs] Section 194R of the Income-tax Act | TDS on Benefit or Perquisite

[FAQs] Section 194R of the Income-tax Act | TDS on Benefit or Perquisite

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The Finance Act, 2022 introduced a new Section 194R under the Income-tax Act to provide for deduction of tax at source in respect of benefit or perquisite provided to a resident person.

Let’s understand the law on Section 194R.

1. Who is liable to deduct tax under Section 194R?

Any person responsible for providing any benefit or perquisite, whether convertible into money or not, is required to ensure that the tax required to be deducted has been deducted in respect of such benefit or perquisite under Section 194R. The deductor can be a resident or a non-resident person.

It is to be noted that this provision is applicable with effect from 01-07-2022. Thus, the benefit or perquisite which has been provided on or before 30-06-2022, would not be subjected to tax deduction under this provision.

However, this provision shall not apply to an individual or a HUF whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakhs in case of the profession during the financial year immediately preceding the financial year in which such benefit or perquisite, as the case may be, is provided by such person.

2. What is meant by ‘person responsible for providing’ benefit or perquisite?

Explanation to Section 194R provides that the expression ‘person responsible for providing’ means the person providing such benefit or perquisite, or in the case of a company, the company itself, including the principal officer thereof.

The definition of ‘person responsible for paying’ as provided in Section 204 will not apply for the purposes of Section 194R. It means a person who has agreed to provide the benefit or perquisite and makes payment for the same to a third party shall be liable for deduction of tax and not the third party who actually provides or delivers the benefit or perquisite after accepting payment from the person who agrees to provide it. For example , a company agrees to arrange foreign tours for its dealers and distributors/agents who achieve specific targets. It is the company that has to comply with Section 194R, not the tour operator/hotels/airlines who, after accepting payment from the company, delivers the agreed/promised foreign tour to the dealers/distributors/accounts.

3. Who is a deductee for Section 194R?

Tax is required to be deducted under this provision if the benefit or perquisite is provided to a resident person and it is arising from business or the exercise of a profession by such resident.

However, in the following situations, the tax shall not be deducted under this provision:

If an employer-employee relationship exists, the tax shall be deducted under Section 192;
If the recipient is a non-resident, the tax shall be deducted under Section 195;
If the benefits or perquisites do not have a connection with the business or profession of the resident recipient/deductee;
If benefits or perquisites are provided to a customer who does not engage in business or exercise of a profession.

For example , if a business entity gifts valuable items, cars, etc., to its resident customers, no tax shall be deducted under Section 194R if a resident customer is not carrying on any business or profession.

4. When is tax deducted under Section 194R?

The tax shall be deducted before providing benefit or perquisite to the resident person. There can be several stages in providing benefit/perquisite to the resident recipient. There cannot be one rule to determine the stage at which tax shall be deducted. It has to be understood in the context of the particular benefit or perquisite that is provided to the recipient. Before the point of ‘providing’ of benefit or perquisite is reached, it has to be ensured that tax is deducted.

For example , a company agrees to provide foreign tours to its dealers/distributors who achieve the target. The following stages are possible in the delivery of promised foreign tour:

A provision is made in the accounts of the provider-company for the estimated cost of foreign tours to those dealers/distributors who achieved the target as of balance sheet date;
The dealer/distributor intimates the foreign destination he wants to proceed to and date when he wants to do so;
The provider-company makes payment to the tour operator and books the foreign tour;
The tickets are then handed over/emailed to the dealer/distributor;
Departure of dealer/distributor to a foreign destination.

In the above example, it seems prudent to deduct tax on reaching Stage (d): The tickets are handed over to dealer/distributor or emailed to him:

5. What is the rate of TDS under section 194R?

The person providing the benefit or perquisite has to ensure that tax has been deducted at the rate of 10% of the value or aggregate of the value of ‘such benefit or perquisite’. The rate shall not be further increased by surcharge and health & education cess as the deductee/recipient is a resident.

If the deductee does not furnish his PAN to the deductor, the tax shall be deducted at the rate prescribed under Section 206AA. However, if such deductee has not furnished the return of income for a specified period, the tax shall be deducted at the rate prescribed under Section 206AB. Where both the provision of Section 206AA and Section 206AB are applicable, that is, the deductee has neither furnished his PAN to the deductor nor has he furnished his return of income for the specified period, the tax shall be deducted at the rates provided in section 206AA or section 206AB, whichever is higher .

The assessee shall have no option to apply for a certificate of lower deduction or nil deduction under this provision, even if his estimated tax liability justifies such certificate. Similarly, the payee cannot plead for non-deduction of tax based on self-declaration in Form 15G or Form 15H.

6. What is the threshold limit for TDS under Section 194R?

The tax shall be deducted under this provision if the value or aggregate of the value of the benefit or perquisite provided or likely to be provided during the financial year exceeds Rs. 20,000. In such a situation, the tax will be deducted on the entire value of benefit or perquisite and not merely the excess of Rs. 20,000.

The CBDT has clarified that since the threshold of Rs. 20,000 is with respect to the financial year, calculation of value or aggregate value of the benefit or perquisite triggering deduction of tax under this provision shall be counted from 1 st April of the financial year. Hence, if the value or aggregate value of the benefit or perquisite provided or likely to be provided to a resident exceeds Rs. 20,000 during the financial year 2022-23 (including the period up to 30th June 2022), the tax shall be required to be deducted in respect of any benefit or perquisite provided on or after 01-07-2022.

7. When the provisions of Section 194R shall not apply?

No tax shall be deducted under this provision in the following circumstances.

No TDS if the value of benefit or perquisite is below Rs. 20,000 No tax shall be deducted under this provision if the value or aggregate of the value of the benefit or perquisite provided or likely to be provided during the financial year does not exceed Rs. 20,000.
No TDS if provider is a specified individual or HUF This provision shall not apply to an individual or a HUF whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakh in case of the profession during the financial year immediately preceding the financial year in which such benefit or perquisite, as the case may be, is provided by such Individual or HUF.

8. How to deduct tax from benefit or perquisite?

Where the benefit or perquisite, is wholly in kind or partly in cash and partly in kind, but such part in cash is not sufficient to meet the liability of deduction of tax in respect of the whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite.

As it is the responsibility of the deductor to ensure that tax has been paid in respect of the benefit or perquisite, the liability may be discharged by:

“payer” by grossing up and paying tax out of his pocket;
“payee” gives cash to the payer to meet TDS liability;
debiting the amount of TDS to the account of the payee if it has a credit balance, so that amount will be paid net of TDS whenever the credit balance is paid to the payee; or
“payee” himself pays tax and gives challan to the payer.

In this respect, the CBDT has clarified that where the payee himself pays tax, the tax would be required to be paid in form of advance tax. The tax deductor may rely on a declaration along with a copy of the advance tax payment challan provided by the recipient confirming that the tax required to be deducted on the benefit/perquisite has been deposited. This would be then required to be reported in the TDS return along with the challan number. Form 26Q has included provisions for reporting such transactions.

Further, where the benefit provider deducts the tax under section 194R and pays to the Government, the tax should be deducted after taking into account the fact the tax paid by him as TDS is also a benefit under section 194R of the Act. Thus, it is suggested to compute the amount of TDS after grossing up the value of benefit or perquisite. In Form 26Q, it shall be shown as tax deducted on benefit provided.

9. How to compute the value of benefit or perquisite for TDS under section 194R?

The CBDT has clarified that the valuation would be based on fair market value of the benefit or perquisite except in following cases:-

The benefit/perquisite provider has purchased the benefit/perquisite before providing it to the recipient. In that case, the purchase price shall be the value for such benefit/perquisite.
The benefit/perquisite provider manufactures such items given as benefit/perquisite, then the price that it charges to its customers for such items shall be the value for such benefit/perquisite.

10. Whether Section 194R apply only when benefit or perquisite is taxable under section 28(iv)?

The deductor is not required to check whether the amount of benefit or perquisite that he is providing would be taxable in the hands of the recipient under Section 28(iv) of the Act. The amount could be taxable under any other section like Section 41(1) etc.

11. Whether Section 194R apply only when benefit or perquisite is taxable in the hands of the recipient?

Section 194R casts an obligation on the person responsible for providing any benefit or perquisite to a resident, to deduct tax at source @10%. There is no further requirement to check whether the amount is taxable in the hands of the recipient or under which section it is taxable.

Unlike Section 195 where there is a requirement to check whether the sum payable to a person is chargeable to tax under the provision of the Income-tax Act or Double Taxation Avoidance Agreement (DTAA), no such requirement is there in section 194R. Hence, there is no requirement for the deductor under section 194R to verify whether the amount is taxable in the hands of the recipient or the section under which it is taxable.

The Supreme Court takes the same view in the case of PILCOM vs. CIT [2020] 116 taxmann.com 394 (SC) in reference to the deduction of tax under Section 194E. It was held by the Hon’ble Supreme Court that tax is to be deducted under section 194E at a specific rate indicated therein and there is no need to see the taxability under DTAA or the rate of taxability in the hands of the non-resident.

12. Whether Section 194R apply only when benefit or perquisite is provided in kind?

The first proviso to section 194R(1) provides that where the benefit or perquisite is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or prerequisite.

This proviso clearly indicates the intent of the legislature that there could also be situations where benefit or perquisite is in cash or the benefit or perquisite is in kind or partly in cash and partly in kind. Thus, section 194R of the Act clearly brings in its scope the situation where the benefit or perquisite is in cash or in kind or partly in cash or partly in kind.

13. Whether section 194R apply where the benefit or perquisite is provided in the form of capital asset?

It has been held by the various courts that benefits or perquisites shall be taxable in the hands of the recipient even if they are in the nature of the capital asset. The following judgments are noteworthy in this respect:

Sum received in pursuance of a consent decree of Court in a suit regarding land transaction taxed as business income 1 .
Where an assessee, a Vedanta preacher, is presented with a car by his disciples, the value of the car would constitute a benefit taxable under section 28(iv) 2 .

Thus, it can be seen that the asset given as benefit or perquisite may be a capital asset in a general sense of the term like car, land, etc. but in the hands of the recipient it is benefit or perquisite and, accordingly, section 194R shall also apply in such cases.

14. Whether sales discounts, cash discounts and rebates are benefit or perquisite?

Sales discounts, cash discounts or rebates allowed to customers from the listed retail price represent lesser realization of the sale price itself. To that extent purchase price of customer is also reduced.

Logically these are also benefits though related to sales/purchase. Since TDS under section 194R of the Act is applicable on all forms of benefit/perquisite, tax is required to be deducted. However, it is seen that subjecting these to tax deduction would put sellers in difficulty. To remove such difficulty it is clarified that no tax is required to be deducted under section 194R of the Act on sales discounts, cash discounts, and rebates allowed to customers.

However, at the same time, it has been clarified in the CBDT Circular that this relaxation should not be extended to other benefits provided by the seller in connection with its sale.

To illustrate, the following are some of the examples of benefits or perquisites on which tax is required to be deducted under section 194R (the list is not exhaustive):

When a person gives Free Samples.
When a person gives incentives (other than discount, rebate) in the form of cash or kind such as car, TV, computers, gold coin, mobile phone etc.
When a person sponsors a trip for the recipient and his/her relatives upon achieving certain targets.
When a person provides free ticket for an event.
When a person gives medicine samples free to medical practitioners.

15. Whether section 194R apply on supplying of free goods under promotional schemes like ‘buy more get more’?

Where free items from the stock of the seller are being offered with the purchase of some items, the CBDT has clarified that Section 194R shall not apply in such a case.

For instance , if the seller offers 2 items free with the purchase of 10 items. In substance, the seller is actually selling and the buyer is buying the 12 items at a price of 10 items. Thus, the seller and buyer record the transaction at the same value. In such a situation, there could be difficulty in applying section 194R provision. Hence, to remove the difficulty it is clarified that on the above facts no tax is required to be deducted.

16. Whether section 194R apply if instead of providing the benefit or perquisite directly to an entity, it is provided to the owner, director, or employee thereof?

The CBDT has clarified where the benefit or perquisite is used by the owner, director, or employee of the recipient entity or their relatives who in their individual capacity may not be carrying on business or exercising a profession, the tax shall be required to be deducted in the name of recipient entity since the usage by owner/director/employee or relatives thereof is by virtue of their relation with the recipient entity and in substance, the benefit or perquisite has been provided to the recipient entity.

To illustrate , the free medicine sample may be provided by a company to a doctor who is an employee of a hospital. The TDS under section 194R is required to be deducted by the company in the hands of hospital as the benefit/perquisite is provided to the doctor on account of him being the employee of the hospital. Thus, in substance, the benefit/perquisite is provided to the hospital.

The hospital may subsequently treat this benefit/perquisite as the perquisite given to its employees (if the person who used it is his employee) under Section 17 and deduct tax under Section 192. In such a case it would be first taxable in the hands of the hospital and then allowed as deduction as salary expenditure. Thus, ultimately the amount would get taxed in the hands of the employee and not in the hands of the hospital. The hospital can get credit of tax deducted under section 194R by furnishing its return of income.

Similarly, if the doctor is not an employee of the hospital but rather working as a consultant in the hospital. In this case, the benefit or perquisite provider may deduct tax under section 194R with the hospital as recipient and then the hospital may again deduct tax under section 194R for providing the same benefit or perquisite to the consultant doctor. To remove the difficulty, as an alternative, the original benefit or perquisite provider may directly deduct tax under section 194R of the Act in the case of the consultant doctor as a recipient.

Here, it is to be noted that the threshold limit of Rs. 20,000 shall be required to be seen with respect to the recipient entity. For instance, if a pharmaceutical company provides benefit of worth Rs. 5000 to 10 doctors working as an employee in a hospital. The value of benefit would be seen with respect to the hospital and not the doctors. Thus, the aggregate value of the benefit provided in this case Rs. 50,000 and, accordingly, the tax shall be required to be deducted.

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17. Whether section 194R apply where the benefit or perquisite is provided to a Government entity?

The provision of section 194R shall not apply if the benefit or perquisite is being provided to a Government entity, like a Government hospital, not carrying on business or profession.

18. Whether the amount of GST be included in the value of benefit or perquisite for TDS under section 194R?

The CBDT has clarified that GST will not be included for the purposes of valuation of benefit/perquisite for TDS under section 194R.

19. If an entity provides its product to social media influencers for publicity, will it be treated as a benefit or perquisite?

The CBDT has clarified that if the social media influencer returned the product like Car, Mobile, Outfit, Cosmetics, etc. to the entity after using it for rendering his services, i.e., social media influence, then it will not be treated as a benefit or perquisite for the purposes of section 194R. However, if the product is retained by the social media influencer then it will be in the nature of benefit/perquisite, and tax is required to be deducted accordingly under section 194R.

20. Whether reimbursement of out of pocket expenses would attract TDS under section 194R?

The CBDT has clarified that if the expenditure in respect of which the reimbursement is made is invoiced in the name of the person who is making the reimbursement then it shall not be treated as benefit or perquisite for the purpose of section 194R. However, if the invoice is not in the name of the person making the reimbursement, then it shall be treated as a benefit or perquisite for the recipient, and, accordingly, tax shall be deducted under section 194R.

CBDT’s circular seems to suggest that even if the reimbursement is made on a cost-to-cost basis, it would attract TDS under section 194R if the expenditure in respect of which reimbursement is made is not invoiced in the name of the person making the reimbursement.

21. Whether expenditure pertaining to dealer or business conference be considered as benefit or perquisite for the purposes of section 194R?

The CBDT has clarified that the expenditure pertaining to deafer/business conference would not be considered as benefit or perquisite for the purposes of section 194R in a case where dealer/business conference is held with the prime object to educate dealers/customers about any of the following or similar aspects:

new product being launched
discussion as to how the product is better than others
obtaining orders from dealers/customers
teaching sales techniques to dealers/customers
addressing queries of the dealers/customers
reconciliation of accounts with dealers/customers.

However, such conference must not be in the nature of incentives/benefits to select dealers/customers who have achieved particular targets. Further, in the following cases the expenditure would be considered as benefit or perquisite for the purposes of section 194R:

Expense attributable to leisure trip or leisure component, even if it is incidental to the dealer/business conference.
Expenditure incurred for family members accompanying the person attending dealer/business conference.
Expenditure on participants of dealer/business conference for days which are on account of prior stay or overstay beyond the dates of such conference.

1 Ramesh Babulal Shah v. CIT (2015) 53 taxmann.com 277 (Bom)

2 CIT (Addl) v. Ram Kripal Tripathi [1980] 4 Taxman 149 (Allahabad)

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21 thoughts on “[FAQs] Section 194R of the Income-tax Act | TDS on Benefit or Perquisite”

In case of Activity Completed on or before 30.06.2022 and invoices raised on 30.06.2022 or july-22 but company settled this invoices in July-22. Will this attract 194R? suppose Activity fall under benefits/perquisite

As the invoices have been settled in the month of July 2022, the benefits/perquisit is being provided in July month itself. Hence the TDS u/s 194R will be attracted.

HI, CBDT has clarified that if the benefit or perquisite has been provided on or before 30th June 2022, it would not be subjected to tax deduction under section 194R of the Act.

Our Company Declare Incentive to Dealer for Quarter April to June in Gold Coin of Rs.100000/. We order Gold to P.N.Gadgil on 27/06/2022. We receive Gold Coin on 5/07/2022 . Would like to know Shall TDS Sec 194R is applicable to Company for Rs.100000/-

Dear Friend, there is NO TDS provision for purchasing the gold coin. The new TDS provision 194R will apply when your company will declare/distribute the Incentive/coins to the dealers.

Yes, as the tax is required to be deducted at the time of providing of the benefit to the recipient. In your case, the benefit shall be deemed to be provided on the date on which gold coins are actually handed to the dealer.

Sir, where a manufacturing company is providing free articles (which are not manufactured by the company) to the stockist and dealers to promote sales and the said stockist & dealers transfer such free articles to their customers. Whether Tds applicable u/s 194R on the company even when such stockist etc. is not the actual beneficiary in substance. Please also explain whether that stockist or dealers are also required to deduct tds u/s 194R

in my opinion the stockist and dealers are just pass through entities and the beneficiary is end customer, who is getting the free articles not in plying of any business or profession, hence TDS u/s 194R will not get attracted. It goes without saying the proper documentation be kept to prove the facts.

Hi Anoop, Where free items from the stock of the seller are being offered with the purchase of some items, the CBDT has clarified that Section 194R shall not apply in such a case.

IS TDS SEC 194R IS APPLICABLE ON INCENTIVE PAID TO SALES STAFF

Hello Sir, Tax is required to be deducted under Section 194R if the benefit or perquisite is received in course of carrying on business or profession. Thus, if an employer-employee relationship exists between the provider and the recipient of the benefit or perquisite, the tax is deductible under section 192 and not under section 194R. Thus, to answer the query, if the incentive is given to sales staff, being an employee, the tax will be deducted under section 192 otherwise section 194R may apply.

While filing 26Q for the period Jul to Sep22. NSDL FUV 7.8 version does not allowed to Validate the file due to 194R deduction data and NSDL authority saying that so far we have not received any guideline for 194R

SIR BEING A SOCIAL INFLUENCER I RECIEVED AMOUNT 200000 ON WHICH TDS HAS BEEN DEDCUTED U/S 194R WHERE I RECIEVED PREQ BY LINKDN ON TARGET COMPLETION, NOW ITS ONE TIME PAYEMNT THAT I HAVE RECEIVED . MY QUESTION, UNDER EHICH HEAD IT WILL TAXED IN INCOME TAX ?

The amount shall be chargeable to tax under the head business or profession.

sir whether foreign package tour of Director of a company for Rs.200000/- is attract any any TDS/TCS from our side. thanks D.K.SAHA

Yes, TCS provisions shall be applicable under section 206C

Hi Sir, We are in wholesale business i.e., supply of electrical switches and cables . We purchased a particular brand materials with dealer and that dealer had given our PAN no to manufacturer; as manufacturer asked that dealer to disclose premium buyer PAN No and now the manufacturer has deducted TDS U/sec 194R and mentioned some perquisite amount. We haven’t done any business with manufacturer, now shall we record them as income and claim the TDS amount and as well as claim expenditure as our Business Promotion Expenses

The value of any benefit or perquisite arising from the business or from the exercise of a profession is chargeable to tax as business income. Thus, we need to first analysis whether the perquisite shown by the manufacture is actually a perquisite or not in accordance with the CBDT’s guidelines. For further assistance, please contact us at [email protected].

Sir, Please explain how to account for the benefit or perquisite received by an paints dealer in form of business conference trip expenses from a paints company, in kind ( enjoyment of tour, which includes travelling expenses, lodge rent and food and beverages provided in the trip)in the recipient’s books.

For the purpose of accounting of gifts/perquisites, a detailed analysis need to be done. Further, it also depends upon the accounting principles being adopted by an entity i.e. AS or Ind AS.

What will be the journal entry for such perquisites to show them as income in the books of accounts of the receiver?

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New 20% TCS Rule on Foreign Travel: Everything You Need to Know

What is tax collected at source (tcs), the impact of the 20% tcs rule on travel, understanding the 20% tcs rule, claiming a refund for 20% tcs, additional information.

The world of international travel is about to face a significant change. Starting from 1st October 2023, a new rule will be implemented that will impact every transaction made abroad. The rule, known as the 20% Tax Collected at Source (TCS), will require individuals to pay an additional 20% tax on their foreign transactions. In this article, we will delve into the details of this new rule, its implications for travelers, and how taxpayers can claim a refund.

Tax Collected at Source (TCS) is a mechanism implemented by the government to collect taxes directly from the seller at the source of certain transactions. It is a way to ensure that taxes are collected at the time of sale or provision of services, rather than relying on the buyer to pay the taxes separately. TCS is applicable to various transactions, including foreign travel expenses.

With the new 20% TCS rule coming into effect from October 1, 2023, there will be a significant increase in expenses for individuals planning international trips. This rule will result in a 15% escalation in expenses, as the TCS rate will rise from the existing 5% to 20%. It is crucial for travelers to be aware of this change and plan their trips accordingly to avoid any financial surprises.

To minimize the impact of the 20% TCS rule, travelers are advised to consider the following:

Cost Limit: Make sure that the cost of your travel package does not exceed the 7 lakh threshold per individual. Packages valued at or under 7 lakh per financial year per individual will still be subject to the existing 5% TCS rate. This primarily includes the costs associated with an annual overseas leisure tour.
Trip Planning: Engage in meticulous and strategic trip planning to maximize budget efficiency. By planning your expenses in advance and making informed choices, you can manage your travel costs effectively and minimize the impact of the 20% TCS rule.

The 20% TCS rule entails that any payments made in a foreign country exceeding ₹7 lakh a year through international credit and debit cards will be subject to a TCS levy at a rate of 20% starting from October 1, 2023. This rule applies to all transactions made abroad, regardless of the payment method used. It is crucial to keep track of your foreign expenses and ensure compliance with the new rule to avoid any penalties or legal complications.

Taxpayers can claim a TCS refund in their Income Tax Return. However, it is important to note that individuals will initially see a higher bill on their cards, potentially blocking their money for several months until a return is filed and the refund is claimed. Taxpayers should keep track of the TCS entries in their Form 26AS to ensure accurate reporting and adjustment of the tax already collected.

The 20% TCS rule was introduced in the Union Budget 2023-24, which aimed to increase the TCS rates from the existing 5% to 20% on overseas tour packages and funds remitted under LRS (other than for education and medical purposes).

The implementation of the 20% TCS rule on foreign travel from October 1, 2023, will significantly impact individuals planning international trips. It is crucial for travelers to understand the implications of this rule and plan their expenses accordingly. By keeping the cost of their travel package below the 7 lakh threshold and engaging in strategic trip planning, individuals can mitigate the financial burden imposed by the 20% TCS rule. Additionally, taxpayers should ensure accurate reporting of TCS entries and claim refunds in their Income Tax Return. Stay informed and compliant to make your international travel experience hassle-free.

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Frequently asked questions, how do i avoid 20% tcs on foreign remittance.

Send money for educational or medical purposes. The 20% TCS will not apply if the funds are being remitted for expenses related to education or medical treatments.

What is the new TCS rule for foreign travel?

The updated Tax Collected at Source (TCS) regulations for remittances and foreign travel will come into effect on October 1. According to the new rules, a 5% TCS will be imposed on foreign travel expenses up to Rs 7 lakh, and a 20% TCS will apply to amounts exceeding this limit.

How do I avoid TCS on foreign tour packages?

To avoid TCS, ensure your travel expenses stay below the Rs 7 lakh annual limit. If you exceed it, remember you can claim this amount back against your tax liability. Keep your TCS certificates, bills, and bank statements organized for tax filing purposes.

Can we claim TCS refund for foreign travel?

Tax Collected at Source (TCS) is applicable to specific foreign transactions originating from India. If you have paid an excessive amount of TCS, you can request a refund when submitting your income tax return. This information covers TCS rates, the refund procedure, and the required documentation, enabling you to recover any surplus amount paid.

How do I claim my TCS refund on foreign travel?

Visit the ITR website and find the TDS (Tax Deducted at Source) section. Request a refund for the TCS (Tax Collected at Source) paid on remittances. Attach a bank statement or Forex card statement displaying the TCS deduction.

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People are splurging on foreign travel as international travel opens up after two years of COVID-19 pandemic. After taking a mood booster, knowing the income tax compliances for travelling abroad is essential.

Where an individual incurs foreign travel expenses exceeding Rs 2 lakh during the year, he/she must disclose the amount of foreign travel expenses by filing the income tax return even if their income before deductions is below the basic exemption limit as per the Income Tax Act. The basic exemption limit is Rs 2.5 lakh for individual taxpayers, but as per the old tax regime, it is Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens.

Let’s understand with an example. Suppose your total income during the Financial Year (FY) 2021-22 is Rs 1.8 lakh, and you have travelled to Singapore in June 2021 and spent Rs 3 lakh. In such a case, you are obliged to file an income tax return in India for the FY 2021-22 and disclose the amount of foreign travel expenses. If the expenditure would have been less than Rs 2 lakh, it is not necessary to file ITR.

It is important to understand that the requirement of filing ITR and disclosure of foreign travel details shall apply even if the amount is spent in foreign currency and is equivalent to Rs 2 lakh or more. The said Rs 2 lakh limit is the aggregate limit of the financial year. Hence, suppose your income is below the basic exemption limit, and you have spent Rs 60,000 for visiting Singapore, Rs 1.6 lakh for visiting Japan and Rs 40,000 for visiting Sri Lanka during the same financial year, you are required to file ITR and disclose such expenses since the total foreign expenses have crossed Rs 2 lakh limit.

Moreover, ITR filing applies even in cases where you have spent an amount on others for foreign travelling. For example, your income is below the basic exemption limit, but you have sponsored a foreign trip for your parents, and the expenditure for the same exceeds Rs 2 lakh. In such cases, too, you must disclose the said expenses and file ITR.

For ITR filing of FY 2021-22, below are the conditions as per the IT Act where the individuals/HUF must file ITR even if their income is below the basic exemption limit:

If total deposits in one or more current accounts exceed Rs 1 crore during the financial year
If total foreign travel expenses for self or any other person is Rs 2 lakh or more during the financial year
If the total electricity bill payment is Rs 1 lakh or more during the financial year
If total business sales/gross receipts during the financial year exceed Rs 60 lakh
If total professional gross receipts exceed Rs 10 lakh during the financial year
If the aggregate of TDS and TCS is Rs 25,000 or more during the financial year (In the case of senior citizens, and increased limit of Rs 50,000 shall apply)
If total deposits in one or more savings bank accounts are Rs 50 lakh or more during the financial year

Hence, if you fall under any of the above conditions, you are required to file ITR mandatorily.

For any clarifications/feedback on the topic, please contact the writer at [email protected]

I’m a chartered accountant and a functional CA writer by profession. Reading and travelling in free time enhances my creativity in work. I enjoy exploring my creative side, and so I keep myself engaged in learning new skills.

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Table of content.

Introduction

Tour Operators to collect TCS now for arranging Foreign Trips

Category Income Tax

For the last many years there has been a tremendous rise in foreign trips by Indian residents. Despite spending huge amounts on such trips, people do not comply with the filing of returns of income. This brings the government to take some corrective steps to reach out for those people who are actually avoiding the mandatory income tax compliances. In this year’s budget, the significant amendment is brought in the Income-Tax Act for Foreign Tour Operators. This amendment is coming in the form of a collection of TCS by these operators arranging foreign tours for their clients.

Every person in the business of foreign tour operators should be aware of these newly introduced provisions to avoid possible tax litigations in the form of interest, penalties etc. The TCS provisions are effective from 01.04.2020. Before moving forward, let us understand the meaning of TCS first and then the rates applicable for tour operators.

What is TCS?

Tax Collected at Source (TCS) is income tax collected in India paid by the seller after collecting it from the buyer at the time of sale of goods or services. Unlike TDS where the buyer deducts tax and deposits to government here seller collects the amount and deposit it to the government.

What are rates applicable to Tour Operators for TCS collection ?

Following are the applicable rates:

Understanding TCS implications

To make it very simple, let us understand how these tax implications can have an impact on your business if not dealt carefully.

Example 1:

Let us suppose you are a Tour Operator engaged in the business of arranging foreign tours for different clients (corporates and non-corporates). Now a customer approached you for arranging a foreign tour which includes accommodation and transportation. The consideration is agreed at Rs 5, 00,000/-. The proper treatment of this transaction is discussed as under:

From the above example, it is clear that the tour operator will collect Rs. 25,000 for arranging a tour for its client.

Suppose in example 1; foreign tour operator could not collect TCS from the client, what is the tax implication and burden now if he collects only Rs.5,25,000. He will have to redefine the entire transaction, which is discussed as under:

From the above example, it is clear that the non-collection of TCS in the first place would lead to an unnecessary burden of Rs. 22,723 for tour operator’s own pocket.

Other Important Provisions

There are many other important provisions related to GST and TCS discussed as under:

GST Provisions

Tour operator is not allowed to claim input tax credits of GST in paying the GST collected from the customers.
Registered persons under GST can claim the credit of GST charged by the Tour operators for discharging their respective GST liability if services are used in the course and furtherance of business.

TCS Provisions

Customers can take TCS credit while filing their income tax returns.
If tour package services are taken by the corporates, then corporates are required to deduct TDS @ rate of 1% or 2% based on the status of the Tour Operator. If the tour operator is an Individual or HUF, the rate is 1%, and for others, it is 2%. Since corporates are mandatorily required to deduct TDS under Income Tax Act, tour operators are not required to collect TCS from these corporates.
Tour operators are required to collect TCS irrespective of the amount of consideration. Therefore there is no minimum limit prescribed by the government to collect TCS.

Disclaimer:

Manish Gupta

Founder, FCA, India Entry and Tax Compliance Strategist

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September 24, 2020

5% TCS on Foreign Remittances from October 1, 2020

International students, foreign travelers, and NRIs – brace for impact! Starting October 1st, 5% TCS will be applicable to foreign remittances & fund transfers under the Liberalized Remittance Scheme (LRS) of the RBI. LRS is a provision under which you are allowed to send $250K outside India in any financial year.

Tax will be applicable on the amount exceeding INR 7 lakh. But the tax on foreign tour packages will be applicable for any amount (no threshold of INR 7 lakh). And for education-related remittances like loans, etc, tax will be only 0.5%.

This provision was introduced as a new sub-section (1G) in Section 206C of the Finance Act, 2020.

What is TCS

Tax Collected at Source (TCS) is an income tax collected by the seller of specified goods, from the buyer. It is a concept where a person selling specific items is liable to collect tax from a buyer at a prescribed rate and deposit the same with the Government.

Let’s take an example to understand the concept of TCS:

Ram purchases jewelry from Yash worth INR 7,00,000. Ram will now be liable to pay INR 7,07,000 to Yash. (Since TCS @1% is added to it)

What is LRS?

Liberalized Remittance Scheme aka LRS is a provision under which you are allowed to send $250K outside India in any financial year. These majorly include expenses related to:

medical treatment
maintenance of close relatives
investment in shares and debt instruments
buying immovable properties abroad.

Individuals can also open, maintain, and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the scheme. However, LRS does not allow the buying and selling of foreign exchange abroad, or purchase of lottery tickets or sweepstakes, proscribed magazines, and so on.

Money cannot be remitted to countries identified by the Financial Action Task Force as “non-cooperative countries and territories”.

No TCS Will be Applicable if:

The amount transfered is less than INR 7 lakh and is NOT for buying a tour package.
Tax is already deducted at source under any other provision of the Income Tax Act (eg. royalty, professional fees, rent transfered overseas to NRI landlord).
Central and state governments, local authorities, and foreign diplomatic remitters are exempt.
GST will not be applicable to the TCS amount.

Non-disclosure of PAN or Aadhaar

If PAN and Aadhaar are not provided, the TCS rate increases.

The rate would be 5% for education-related (eg. education loan as defined in Section 80E) transfers
The rate would be 10% for any other remittance

How Will TCS on Foreign Remittances Work?

The TCS will be collected

at the time of the receipt of the amount or
at the time of debiting the amount payable (whichever is earlier)

An additional surcharge and health & education cess are levied if the buyer is a non-resident person or a foreign company. The sum paid as TCS will be allowed as a credit while furnishing return of income. You can get your monthly TDS reduced if it is a salaried individual. Also, you can adjust it against your advance tax payment when the next instance falls due. The sum can also be collected as a refund, provided there is no tax liability. This is designed to get people who send money abroad to file tax returns. Therefore, if a person does not file his return, the government would get to keep this 5% amount.

An authorized dealer (dealing in foreign exchange or foreign security) or overseas tour operators shall collect the TCS.

Calculation of TCS on Foreign Remittances/Transfers

Case 1: If a sum of INR 10 lakh is transferred under LRS in a financial year, a TCS at 5% will be applicable on INR 3 lakh (INR 10 lakh minus INR 7 lakh). The tax collected will be INR 15,000.

Case 2: If a sum of INR 10 lakh is transferred for the purchase of an overseas tour package, you have to make a payment of INR 10,15,000 (INR 10 lakh plus 5% of INR 3 lakh). (since there is no such relaxation of the INR 7 lakh threshold to buy overseas tour packages)

Why This Rule?

There have been instances of misuse of the window provided under LRS. People send more than the permissible limit to foreign countries as remittances.

According to a statement by the Government-

A survey of 5,026 samples of foreign remittances took place
1,087 did not file any return
In F.Y. 2018-19, $14B was sent out using LRS
Compared this to figures of F.Y. 2009-10, less than $1B was sent out using LRS
No returns were filed for around 24% of the amount sent by these 5,026 remitters

Here is an example. Your local Kirana store owner does not file taxes. But every year he goes on a fancy international trip. Therefore, a provision to collect tax on such transfers was introduced. This will help the department identify those transferring money in excess of the specified limit but not furnishing return of income.

The Impact

Indian students and tourists going abroad and Indian investors investing in stocks, bonds, and property abroad will be impacted. It increases up-front costs of international travel and remittances to dependents overseas. Example, parents sending money to children studying abroad. This might also reduce disposable cashflows. One will also have to wait for a year, or more, to get their tax refund.

Tour & travel agents can also suffer if people switch to self-bookings instead of buying packages to avoid TCS. On the other hand people might also shift from international travel to domestic travel. This will give a boost to the domestic tourism industry.

Final Verdict

The Union Finance Ministry is extending the scope of both tax-deducted at source (TDS) and tax collected at source (TCS). They would now have a better idea of transactions in the Indian economy. Also, they will be able to tally the spending patterns with the reported taxable income.

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Got Questions? Ask Away!

Why the extension? As per the Income Tax Act of 1961, it was mandatory to submit Form 15CA/15CB electronically. However, taking into account the inconvenience of the taxpayers to furnish the forms electronically, it was decided that taxpayers could submit the Forms manually to the authorized dealer manually till 30th June 2021. However, the deadline has been further extended and taxpayers can submit the Forms manually till 15th July 2021.

I have received an email for deduction of TDS on dividend. It mentions that I should submit Form 15G if I want TDS to be deducted at lower rate. What happens if I dont submit Form 15G?

Form 15G is a document submitted by the investor for deduction of TDS at lower rate or nil rate. It is not mandatory to submit Form 15G to the Company.

Thus, if you do not submit Form 15G to the Company, you would still receive the dividend. However, if the dividend amount exceeds INR 5,000, the shareholder would receive the dividend after deduction of TDS at 10% (reduced to 7.5% for FY 2019-20)

Have you received an email for deduction of TDS on dividend - Read more here - TDS on Dividend paid in FY 2020-21

Are there any forms or documents that i need to file while applying for a bank fixed deposit? I want to know what are the tax benefits if i invest in a Fixed deposit. Hoping for a prompt reply.

Form 15G/ Form 15H is one of the form which is used to make sure that TDS is not deducted from your income. If your tax liability for a year is zero then you can file Form 15G or Form 15H with the deductor.

Moreover, fixed deposits also provide tax benefits under section 80C of the Income tax Act.

Hope this helps!

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TCS on Foreign Remittance

Swapnil Agarwal

Many individuals in India utilize the Liberalised Remittance Scheme (LRS) by the RBI to send money abroad for purposes such as studies, medical treatment, business, and training. However, in the Budget 2020, the Finance Minister introduced a new provision. Under this provision, if the remitted amount under the LRS surpasses the specified limit, Tax Collected at Source (TCS) becomes applicable on the excess foreign remittance. The objective behind this provision is to monitor remittances and establish a correlation with the income tax returns of the individuals making such remittances.

What is LRS?

Is tcs applicable on foreign remittances, tcs on international credit card payments, rate of tcs on foreign remittance, when to collect tcs on foreign remittance, exemptions from tcs.

The Liberalised Remittance Scheme enables individual Indians to remit funds outside India up to USD 2,50,000 in a financial year. However, Corporates, Partnership firms, HUF, Trusts, etc., are not eligible under this scheme. Additionally, when a minor makes the remittance, the Minor’s guardian must sign the LRS declaration form.

The person can make the following remittances under this scheme:

Private visit to any country (except Nepal and Bhutan)
Gift or Donation
Medical treatment
Maintenance of close relatives abroad
Purchase of property
Investment in shares, mutual funds, and debts

Note: Under certain conditions, universities or medical institutes may permit individuals to exceed the prescribed limit of the Liberalised Remittance Scheme (LRS) for studies or medical treatment.

TCS is applicable in the following situations:

If an authorized dealer receives an amount of more than INR 7,00,000 in a financial year from a buyer who is remitting the amount outside India under the LRS, then the dealer must collect TCS over INR 7,00,000.
In the case of the sale of an overseas tour program package, the seller should collect TCS on the entire amount received from the buyer irrespective of any limit.

The Finance Ministry on 28th June 2023 notified new rules under FEMA, stating that if you have done any transaction through international credit cards while being overseas would not be counted as LRS and hence would not be subject to TCS till further order.

However, If you swipe your credit card, debit card, or forex card from 1st October 2023 onwards for more than INR 7 lakhs for any other purpose under the LRS, then TCS at 20% will be applicable.

Let’s understand this with the help of an example:

Example 1: Shyam is transferring INR 10,00,000 under the Liberalized Remittance Scheme (LRS) for medical treatment. In this scenario, the seller must collect Tax Collected at Source (TCS) at a rate of 5% on the amount exceeding INR 7,00,000. Thus, the TCS amount will be INR 15,000 (5% of INR 3,00,000).

Example 2: Ram is considering buying an overseas tour package from a tour operator, and the package costs INR 8,00,000. As per the guidelines of Budget 2023, the seller needs to collect Tax Collected at Source (TCS) at a rate of 20% on the entire amount, resulting in a TCS of INR 1,60,000 (20% of INR 8,00,000). Consequently, Ram is expected to make a total payment of INR 9,60,000 to the tour operator.

One should collect TCS either at the time of:

receipt of remittance amount by any mode from the buyer or
at the time of debiting the amount payable by the buyer, whichever is earlier

Following are the conditions in which TCS will not be applicable:

TDS is applicable under any other provision of the Income Tax Act
Buyer is a CG, SG, High Commission, Consulate, Foreign diplomat, Local authority, or any other notified person.
The amount remitted is up to INR 7,00,000 for studies or medical treatment.

The seller must file a return in Form 27EQ if the seller has collected TCS on foreign remittance or the sale of the overseas tour package. Additionally, the seller can issue a certificate in Form 27D to the buyer whose tax has been collected.

No, the sale of air tickets will not attract TCS unless or until it is a complete package itself.

Yes, All the Individuals and HUF are required to collect TCS from the buyer. They have not been given any exemption under the same.

No, CBDT has given relaxation to NRI visiting home. Now, the sale of overseas tour packages to non-resident individuals visiting India does not require the seller to collect TCS.

No. GST is not applicable on the TCS. However, GST will apply to the currency conversion, remittance charges, or any other charges as applicable.

No, If the seller has already deposited the TCS to the Government, it will not be refunded. However, you can claim a refund of the same amount while filing the income tax return.

Got Questions? Ask Away!

Hey @Ansar_Firozs ,

You can submit a declaration stating your PAN and name to not collect TCS from you as you will be deducting TDS.

Hope this helps!

Hey @Deepanshujha ,

If you book a tour package for travelling abroad, whether online or offline, and the cost is more than Rs 7 lakh in a year, you need to pay TCS at a rate of 20% starting from October 1, 2023. If the tour package costs up to Rs 7 lakh, the TCS rate is 5%. The company you book with will collect this tax when you make the booking.

However, you can claim this amount when you file your Income Tax Return (ITR). The details of TCS will be in your Form 26AS, which you can use when filing your ITR.

You can read the following article that explains the same in detail:

You can make standalone bookings. The definition of “tour packages” is not exactly defined in the Income Tax Act and hence we can assume that TCS will not be levied in case of standalone bookings.

Continue the conversation on TaxQ&A

3 more replies

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Last Updated on 5 months by Swapnil Agarwal

Villanova Univeristy Athletics

2024 foreign tour: villanova volleyball edition.

For the first time in program history, Villanova volleyball ventured to the Eastern Hemisphere for a foreign tour, spending over a week seeing the world with visits to Slovenia and seven different Italian cities.

The Wildcats played four matches against international opposition during their European excursion while sightseeing and bonding as a unit over the 10-day trip.

Scroll down the page to see a day-by-day recap of the trip, featuring pictures, highlights and player quotes.

I loved getting to explore such a beautiful country today, especially watching the sunset from the winery! I'm so grateful that volleyball has brought this team together and given us awesome experiences like this.

Today was jam packed with so many fun things, and I really enjoyed getting to see the sights of Maribor in unique ways. My favorite part of today was riding the Alpine Slide and seeing the joy on everyone's faces as they went down. I'm so thankful to be able to share these amazing experiences with my teammates!

Today in Venice was amazing! We visited St. Mark's Basilica and the most beautiful bookshop in the world, then went on a gondola ride. I am so unbelievably grateful for this time exploring different cultures with the team.

Today we went from Venice to Verona to Milan! In Verona, we saw Juliet's House and took pictures with her famous statue. There were visits to bookstores, clothing stores and hole in the wall sandwich shops. After lunch, we drove to Milan and had dinner at a nice pizza place. The night ended with walking around the city and seeing what the night life had to offer!

We had the most wonderful day in Milan! We went into the Duomo and saw the amazing detail put into it. From there, we walked around to all the stores, shopped a little bit on the streets and found a well-known lunch place with the best sandwiches. We headed over to play our game then ended the night with some great dinner: lots of bread, pizza and pasta. I'm so thankful to be here with my teammates and coaches, it's something I'll remember for a lifetime.

We had an amazing time in Como today! We rode a funicular up a nearby mountain for a beautiful view of the city and had a delicious lunch up there. After coming back down, we enjoyed some sweet treats at a cafe near the lake. We ended our time in Como admiring the beautiful architecture and visiting their cathedral. After sightseeing, we headed to the Italian National Team's training center for a great practice and had dinner in their facility to end the night. I am so thankful for all the things we've gotten to experience on this tour!

Today was one of my favorites! We woke up early to drive to Florence but it was well worth it. I feel so lucky to be on this trip with my team and getting to know everyone better is such a blessing. The cherry on top was spending dinner in a homey winery and eating traditional Italian cuisine on a mountain top.

Our first day in Rome was full of sightseeing, walking through the city and making memories with teammates old and new. We first went to the Vatican Museum and Augustinian headquarters then saw the Tiber River, Trevi Fountain, Pantheon and Piazza Navona. My favorite thing about today and the trip has been the funny stories I'll never forget with my friends! Ooh and the yummy gelato!

Our last match today was a good one with VolleyRo, glad to see our team play one more time on tour. They've played really well and I'm excited to get this head start to the season. Then the Colosseum and Roman Forum were amazing. We ended the night with a good recap dinner and celebrating Campbell's birthday with tiramisu. I'm just really grateful to have a group like the one we currently have. They made this trip so much fun.

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Foreign diplomats tour Beirut airport after weapons claims

Beirut (AFP) – Senior Lebanese officials on Monday defended procedures at Beirut airport during a tour for journalists and diplomats, a day after a British daily alleged Hezbollah was storing weapons at the facility.

Issued on: 24/06/2024 - 16:37 Modified: 24/06/2024 - 22:49

The accusations came during escalating exchanges of fire and bellicose rhetoric between Lebanon's Hezbollah movement and Israeli forces, which have engaged in near-daily fire since war in Gaza began.

Hezbollah has been acting in support of its Palestinian ally Hamas since the militant group's October 7 attack on Israel that sparked the Gaza war.

On Sunday, British daily The Telegraph reported that Hezbollah was storing missiles and rockets at Beirut airport, where "whistleblowers" had reported the arrival of "unusually big boxes" from Iran.

Hezbollah has not made any official comment.

"The airport adheres to international standards," said Transport Minister Ali Hamieh, who led the visit together with Lebanon's ministers for foreign affairs, tourism and information.

Representatives from foreign missions including Egypt, Germany and the European Union delegation joined the tour of the airport's warehouse facilities.

Hamieh on Sunday held a press conference to reject The Telegraph report as false and "to say that there are no weapons entering or leaving Beirut." He invited ambassadors and reporters for the tour.

At the airport, Hamieh described The Telegraph report as part of "psychological war" on Lebanon and said it was a "distortion of the reputation" of Lebanon's only international airport.

The tour "included an import and export centre... that accounts for 20 percent of the import traffic and is concerned with services for Iranian planes which were the subject of The Telegraph report", Hamieh said.

Another warehouse accounted for the remaining 80 percent of imports and exports, he told a press conference.

Israel has for years accused Hezbollah of keeping weapons in installations throughout Lebanon, including near Beirut airport, an accusation Hezbollah has denied.

Israel bombed Beirut airport when it last went to war with Hezbollah in 2006.

The airport's manager, Fadi El-Hassan, said all aircraft arriving at the facility, including Iranian planes, "are subject to the same customs procedures".

Egyptian ambassador Alaa Moussa said that while diplomats were not responsible for inspecting the airport for prohibited items, "our presence (at the tour) is a message of support" to Lebanon and "a message to all parties that what is needed... is calm".

The United States, Israel's key ally, said its ambassador did not attend the tour of the Beirut airport but that Washington had been in touch with Lebanese authorities over the allegations in the Telegraph article.

“We've seen the statement from the government of Lebanon that the report's not grounded in fact. We take these issues extremely seriously and monitor them very closely," State Department spokesman Matthew Miller said, without offering a US assessment on whether the report was accurate.

More than eight months of cross-border fire between Hezbollah and Israeli forces have left at least 481 people dead in Lebanon, mostly fighters, but also including 94 civilians, according to an AFP tally.

Israeli authorities say at least 15 soldiers and 11 civilians have been killed in the country's north.

Housewife Rola Qassem, aged around 50, who had just arrived from Ivory Coast to spend summer in south Lebanon with her family, said she didn't believe the reports of weapons being stored at the airport.

"It's all lies so that people are afraid to go to Lebanon, to stop tourism," she told AFP.

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Several Undecided Latino Voters say Debate Shifted them to Biden

S everal undecided Latino voters said they would vote for President Joe Biden after watching his Thursday night debate with former President Donald Trump , according to a video posted online.

Headlines about Biden stumbling over his words and being difficult to hear have not stopped since he and Trump went head-to-head in the first 2024 presidential debate in Atlanta.

Even some Democrats have called for the party to reconsider its options. Those calling for a different candidate include Andrew Yang , who ran against Biden for the nomination in 2020.

"What's Joe Biden's superpower? That he's a good guy who will do the right thing for the country," Yang wrote on X, formerly Twitter . "In this case, that's stepping aside and letting the DNC choose another nominee."

But some Latino voters said otherwise when they told American Spanish-language TV network Univision they would support Biden.

Out of a group of 14 previously undecided voters questioned by the network, five said they would vote for Biden, one chose Trump and eight said they were still undecided.

When asked to vote for who won the debate, seven said undecided, six said Biden and one said Trump.

One of the men told a journalist he had chosen Biden because "Trump sounded like a crazy liar," according to Matt A. Barreto, professor of Political Science and Chicana/o & Central American Studies at UCLA.

The man being interviewed said Trump "said the same thing time after time" and was not answering questions or "saying how he would fix things," according to a Newsweek translation.

He went on to say that "Biden was indeed a bit slow in talking," saying the president "has a stutter" but believes Biden explained "what he has done and what he is still doing while president.

"After being undecided for a little while, I think today, I switched to Biden," he added.

In the most recent Times /Siena poll , carried out by The New York Times and the Siena College Research Institute, 45 percent of Hispanic people said they would vote for Biden and 44 percent said Trump.

The people surveyed included "leaners," which refer to people who have a preference for a candidate but are open to changing their minds.

In the 2020 election, Trump received 32 percent of the Latino vote, up from the 28 percent he received in 2016.

His growing popularity among Latinos, as well as with other minority groups like Black Americans, is often cast as a surprise by his critics given his past rhetoric about Mexican migrants. He infamously used the words "rapists" and "criminals" to describe people illegally coming into the U.S. through its southern border in 2015.

When it came to the topic of immigration in Thursday's debate, Trump said, among other things: "There have been many young women murdered by the same people he allows to come across our border.

"We have a border that's the most dangerous place anywhere in the world—considered the most dangerous place anywhere in the world. And he opened it up, and these killers are coming into our country. And they are raping and killing women, and it's a terrible thing."

Trump and Biden made reference to a recent headline-making case in which two Venezuelan men, who entered the U.S. illegally, were arrested on suspicion of killing a 12-year-old Houston girl whose body was found in a creek after she disappeared while walking to a shop.

A recent Northwestern University study, which looked at incarceration rates over a 150-year period, found that immigrants are 60 percent less likely to be incarcerated than U.S.-born citizens.

Researcher economist Elisa Jácome concluded that "immigrants with lower levels of education today are significantly less likely to commit crimes than their U.S.-born counterparts."

Correction on 06/29/2024 at 4.16 p.m. ET. Corrects to clarify details and sourcing and to edit headline to reflect these changes

Update on 07/01/2024 at 11.48 a.m. ET. Adds further details of figures

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President Joe Biden speaks at a presidential debate watch party on Thursday. Several undecided Latino voters said they would support Biden after the debate.

Text: A A A Print Society

Demand escalates for tour guides with foreign-language skills.

A group of foreign tourists poses for a photo at the Palace Museum in Beijing, on April 25. (CHINA DAILY)

Tour guides who can speak foreign languages have become some of the most sought-after employees in China, as the inbound tourism market continues its rapid recovery.

"It feels like I've been working every day and have no time to take a short break," said Liu Yiling, a 31-year-old English-speaking tour guide in Beijing, who has worked in the tourism sector for six years.

"My friend in Shanghai, who is also an English-speaking tour guide and knows some French, has seen her daily pay surge to 1,500 yuan ($206) from around late April," he added.

In 2021, when the tourism industry was hard hit by the COVID-19 epidemic, Liu switched jobs from being a tour guide to a preschool teacher.

"My career had bleak prospects and I transferred to the education sector," he said. "But I still loved being a tour guide, because the human touch and person-to-person communication are really attractive to me. So I decided to return to the tourism industry in February."

The must-see Beijing attractions for foreign visitors are the cultural and historical highlights of the Palace Museum, the Great Wall, and the Summer Palace, he said.

"We tour guides are like multitaskers who are responsible for interpretation work, managing foreigners' accommodation and itineraries, and more importantly, explaining to them China's customs and culture," Liu said.

His current monthly pay is 15,000 to 20,000 yuan, and he is confident about the tourism market's performance this summer — the traditional peak season.

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8th China-Eurasia Expo opens in China's Xinjiang

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Union Budget 2024

Tax Know-How for Travel Businesses: Deciphering TDS & TCS Requirement

Taxation regulations, particularly Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), pose significant challenges for businesses in the travel industry. Understanding the intricacies of these requirements is crucial for ensuring compliance and managing financial obligations effectively.

Deciphering TDS and TCS Requirements

In the intricate world of taxation, businesses in the travel industry must adhere to specific regulations, including Tax Deducted at Source (TDS) . TDS plays a crucial role in ensuring tax compliance and revenue collection. This article delves into the nuances of TDS as it pertains to the travel sector, elucidating its significance, applicability, and implications.

In the travel industry, TDS applies to a spectrum of transactions, including but not limited to:

1. Commission to Travel Agents: When travel agents or intermediaries receive commissions for booking tickets, hotels, or other services, TDS is applicable on such payments

Two Possibilities –

a. Booking for only one time – For this travel agent simply charges commission for making tickets available for you. And commission is a very specific word used u/s 194H. Hence TDS will be deducted as per rate of section 194H.

b. Contract on Monthly Basis – If you have a contract with your agent and billing is done on monthly basis it will give your arrangement a nature of contract. Then it will be deducted as per section 194C.

2. Payments to Hotels and Airlines: Where a person, except an individual or HUF, is required to make payment for booking hotel accommodation, which is considered as rent to a resident, such person needs to deduct TDS on such payment to the such hotel under section 194I. Things to take care of :-

a. Payer shall be other than Individual or HUF to whom TDS Provisions are not Applicable

b. Payment amount should Exceed Rs. 2,40,000

c. Should be of recurrent nature

Tax Know-How for Travel Businesses Deciphering TDS & TCS Requirement

Case Scenario 1

Q. X is a Travel agent and book hotel rooms for their customers. During which sometimes the amount exceeds Rs 240000. Whether it shall be treated as rent ? whether TDS shall be deducted ?

Ans. If the arrangement with hotel is solely for room rent then provision of Section 194I should be checked. But definition of word Rent is very specific.

As per the explanation of Section 194I, rent means any payment made under lease or sub-lease or tenancy or any agreement for the use of the following: Land and Buildings (including factory building), Machinery, Plant and Equipment, Furniture And Fittings.

So, in case if the Accommodation (may be rooms/ conference hall/ convention halls/ banquet hall), are taken for any purpose along with other arrangement like food, music etc. Then it would not merely renting of accommodation but complete package. In such case, provisions of section 194C should be checked. It is disbelief that if section 194I is not applicable then section 194C should be applied.

If hotel/ guest house is not under any legal obligation to provide room to company but the booking is provided subject to availability, this should not be treated as Accommodation taken on Regular Basis. Therefore, provision to deduct TDS should not be applicable.

3. Foreign Currency Exchange : TDS, or Tax Deducted at Source, on foreign currency payments is a mechanism through which tax is deducted by the payer while making payments to a non-resident individual or entity in foreign currency. It ensures that the government receives its due tax revenue from foreign payments made from India.

The rate of TDS on foreign currency payments can vary depending on the nature of the payment. Common rates range from 5% to 20%, but it’s essential to refer to the specific provisions of the Income Tax Act or any Double Taxation Avoidance Agreement (DTAA) between India and the recipient’s country to determine the applicable rate.

Rule 26 of the Rules and deduction of tax at source prescribes the rate of exchange to be used for conversion of foreign currency into INR for the purpose of making TDS.

4. Corporate Travel Expenses : In the case of businesses, TDS might apply to reimbursements or payments made for employee travel expenses. This includes expenses like hotel stays, airfare, meals, and other travel-related costs.

TCS is applicable to only certain transaction for namely,

1. Overseas Tour program Package : Overseas Tour Programme Package** means, any tour package which offers visit to a Country or Countries or Territory or Territories outside India attracts Section 206C(1G)(b). It includes expenses such as,

Expenses incurred on travel
Expenses incurred for stay
Expenses incurred for boarding or lodging
Any expenditure of similar nature or in relation thereto

Section 206C(1G)(b) – Applicable from 01st October, 2020 and with effect from 1st Oct 2023 the rate will be 20%.

Not applicability – It will not attract provisions of TCS in two cases,

In case if the traveller has deduct TDS under any section.
If the service Beneficiary is Central Government, State Government or any other similar to the both specified.

**Note – TCS shall be applicable only in case of a “Overseas Tour Package”, irrespective of the purpose of the trip ( Business or Individual ). Independent activities do not constitute a package. In the literal meaning, sale of air tickets and hotel bookings done independently do not call for tax collection at source.

Case Scenario 2

Q. M/s XYZ Co. has appointed a travel agent for booking of all the hotel stay requirement of company’s employee. Agent raises a invoice on a monthly basis for all the booking done by him. However in his invoices, he doesn’t show his service charges separately. Whether TDS shall be attracted for such payment & if Yes than under which section?

Ans. Commission a very specific word has been used under section 194H hence TDS should be deducted u/s 194H. However in the given case contract with agent have been made and payment of such contract is paid on monthly basis which give your arrangement a specific nature i.e. contract of work and when it is contract of work then you will have to deduct tax u/s 194C.

In conclusion, the applicability of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions in the travel and tour industry hinges upon the specific scenarios encountered within your business operations. By gaining clarity on these provisions, you can ensure compliance with tax regulations and navigate your financial responsibilities effectively. Whether it’s deductions from payments made or collections at the point of sale, understanding the nuances of these provisions is crucial for smooth operations and sustainable growth in the dynamic landscape of the travel and tour sector.

Authors: Vansh Shah | Associate Consultant | Email : [email protected] | Contact: +91 98709 25375

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IMAGES

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COMMENTS

You have to pay more for foreign tour packages from July 1, 2023: How
If you are buying a foreign tour package from a travel agent, you have to pay a tax collection at source (TCS) of 20% from July 1, 2023. Budget 2023 has hiked the TCS rate for foreign remittances under the LRS from 5% to 20% (except for education and medical purposes). With this sharp rise in TCS, foreign trips are likely to become costlier soon.
TCS on Foreign tour Packages
Form 27D. Conclusion: The introduction of Tax Collected at Source (TCS) under Section 206C (1G) of the Income Tax Act impacts travelers purchasing Overseas Tour Programme Packages. With tour operators mandated to collect TCS from buyers, it's essential for both travelers and operators to understand their obligations under this provision.
3 ways to avoid the 20% TCS on overseas tour packages effective July 1
If you are booking a foreign trip with an Indian tour operator, it will levy a TCS of 20 per cent on the entire tour package from July 1, 2023. For instance, you are booking a trip to Europe that costs Rs 3,00,000 through your local travel agent. Then the agent will be required to collect a TCS of 20 per cent on the tour package.
Different ways you can avoid the 20% TCS on overseas tour packages
Starting from July 1, 2023, if you book a foreign trip through an Indian tour operator, they will impose a tax collected at source (TCS) of 20% on the entire tour package. For example, if you plan a trip to Europe with a total cost of Rs 3,00,000 through a local travel agent, the agent will be obligated to collect a TCS of 20% on the tour package.
[FAQs] on Understanding TCS on LRS & Overseas Tour Packages ...
The Government vide Finance Act, 2020, amended section 206C of the Act, and introduced sub-section (1G) to section 206C, covering remittances made under LRS and Overseas Tour Package Program under the ambit of TCS and mentioning that under LRS, if an amount greater than Rs. 7 Lakh is remitted, then TCS @ 5% shall be applicable. The Government ...
TCS on Overseas Tour package
On July 1, 2023, a 20% TCS will be required if you buy an international tour package from a travel agent. You must pay TCS of 20% even if you buy foreign currency for your international travel individually from an authorised dealer. "Indians' international travel will be impacted by this idea, particularly for those who book tour packages.
TCS on Foreign Travel, Tours Packages, Remittance
Introduction. The government imposed a tax collection at source akin to TDS on remittances — after an internal survey by the income tax department, showed that a large number of those sending out money had not filed income tax returns.. The finance bill 2020 has proposed an amendment to section 206C to levy 5% TCS on overseas remittance and for sale of overseas tour package.
Understanding TCS on Overseas Tour Packages
If the foreign tour packages cost up to Rs 7 lakh, TCS will be levied at 5 per cent. Provisions relating to Tax Collection at Source (TCS) on Foreign Tours as introduced by Finance Act, 2020. ... whereas this provision does not apply when the buyer deducts the TDS. E.g., ABC Ltd (corporate client) approached XYZ Tourism Ltd. (Seller) to ...
New TCS on Foreign Travel: What You Need to Know
Suppose you purchased a Rs 9,00,000 foreign tour package during a financial year. As per the new proposed rate, starting Oct1, 2023, for an overseas tour package purchase, you will be charged 20% TCS on overseas tour packages on amounts exceeding Rs 7 lakhs. This means that you must pay { (2,00,000)* (20/100)}=Rs 40,000 as TCS on international ...
TDS & TCS on Foreign Remittance
In such a case, No TDS would be deducted on the first Rs. 7 Lakhs and 5% TCS will get applicable on the balance 3 Lakhs. Thus, Rs. 15000 (i.e. 5% of Rs. 3 Lakhs) will get deducted as TCS. Example 3: TCS on Overseas Tour Package Mr. Gupta has taken a Tour Package to travel to the US and has paid Rs. 10 Lakhs.
Govt clarifies how TCS will be applicable on flight tickets, hotel
For purchase of overseas tour program package, the threshold of Rs 7 lakh applies to determine the applicable TCS rate as 5% or 20%. Question 6: A resident individual spends Rs 3 lakh for purchase of overseas tour program package from a foreign tour operator and remits money which is classified under LRS.
Foreign travel to get expensive from July 1! Tax collected at source to
As per the announcement made in Budget 2023, the Tax Collected at Source (TCS) rate on foreign remittances, including bookings for tour packages, will rise sharply from 5 per cent to 20 per cent ...
TDS at 5% on foreign tour packages, remittances abroad
The seller of overseas tour packages shall collect TCS of 5 per cent from the buyer. (Photo: Reuters) Money flowing out of India is being taxed with tax deduction at source added on services like foreign tour packages and remittances as the outgoing funds flow is sought to being taxed. The Budget 2020-21 has mandated a 5 per cent tax collection ...
[FAQs] Section 194R of the Income-tax Act
The following stages are possible in the delivery of promised foreign tour: A provision is made in the accounts of the provider-company for the estimated cost of foreign tours to those dealers/distributors who achieved the target as of balance sheet date; ... No TDS if the value of benefit or perquisite is below Rs. 20,000
New 20% TCS Rule on Foreign Travel: Stay Informed and Navigate the
Packages valued at or under 7 lakh per financial year per individual will still be subject to the existing 5% TCS rate. This primarily includes the costs associated with an annual overseas leisure tour. Trip Planning: Engage in meticulous and strategic trip planning to maximize budget efficiency. By planning your expenses in advance and making ...
New tax rule (TCS) explained: TCS on Forex transactions under LRS
Also Read :- New TCS on Foreign remittance. Case 3: Let's assume you purchased a Rs 9 lakhs tour package during a financial year. In this case, you will be charged a 20% TCS over a threshold limit of 7 lakhs as per the new proposed rate, starting Oct1, 2023. So, you are liable to pay {(2,00,000)*(20/100)}=Rs 40,000 as TCS.
Do you need to file ITR and disclose your foreign travel expenses?
In such a case, you are obliged to file an income tax return in India for the FY 2021-22 and disclose the amount of foreign travel expenses. If the expenditure would have been less than Rs 2 lakh, it is not necessary to file ITR. It is important to understand that the requirement of filing ITR and disclosure of foreign travel details shall ...
Tour Operators required to collect TCS on Foreign Trips
If the tour operator is an Individual or HUF, the rate is 1%, and for others, it is 2%. Since corporates are mandatorily required to deduct TDS under Income Tax Act, tour operators are not required to collect TCS from these corporates. Tour operators are required to collect TCS irrespective of the amount of consideration.
5% TCS on Foreign Remittances from October 1, 2020
But the tax on foreign tour packages will be applicable for any amount (no threshold of INR 7 lakh). And for education-related remittances like loans, etc, tax will be only 0.5%. ... Have you received an email for deduction of TDS on dividend - Read more here - TDS on Dividend paid in FY 2020-21. Sofiyah_Valiante says: March 3, 2021.
New TCS rule from 1st October 2023: Tips to reduce TCS on foreign trip
Get insights into the new Tax Collection at Source (TCS) rules effective from October 1, 2023, impacting foreign trips. Discover tips to reduce TCS on global journeys, understand the Liberalised Remittance Scheme (LRS) changes, and unlock the complexities for international travelers. Learn how TCS applies to various expenses, including education, medical purposes, and overseas tour packages.
TCS on Foreign Remittance
The Finance Act 2020 introduced 5% TCS to be applicable on foreign remittances and fund transfers exceeding â ¹7,00,000 under the Liberalized Remittance Scheme (LRS) of the RBI. In case TDS has already been deducted on such foreign remittances, then TCS will not be applicable. The PAN or Aadhaar number needs to be provided at the time of making the remittance, failing which, 10% TDS will be ...
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Tax Know-How for Travel Businesses: Deciphering TDS & TCS ...
Foreign Currency Exchange: TDS, or Tax Deducted at Source, on foreign currency payments is a mechanism through which tax is deducted by the payer while making payments to a non-resident individual or entity in foreign currency. It ensures that the government receives its due tax revenue from foreign payments made from India. ... Overseas Tour ...
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