Booking international travel packages will cost extra for Indians as of July 1, 2023. Except for remittances for education and medical expenses, the government has raised the tax collection at source (TCS) rate for international transfers made under the Liberalised Remittance Scheme (LRS) from 5% to 20%.
This means that you will be required to pay 20% TCS if you book an international tour package through a travel agent. Similarly to this, there will be a 20% TCS charge if you buy foreign currency on your own from an authorized dealer for your international travel.
It’s crucial to remember that the TCS only affects payments made by banks, meaning that any costs associated with international travel paid for through bank transfers will be affected. Payouts for group tours, for example, are among them. With this plan, it will be possible to track down high-net-worth individuals who send significant sums of money abroad and make sure they pay their taxes in a timely manner.
However, there are ways to control these higher prices. The hike in TCS is anticipated to make international travel more expensive for Indians. Instead of buying a comprehensive travel package, one option is to book individual tour components, such as hotel rooms and airline tickets, separately. As a result, you won’t create a group and be subject to the TCS levy.
“It is mandatory for Indian travelers to consider this additional financial obligation when planning their international trips.” The installation of a 20% TCS is anticipated to increase individuals’ immediate total travel expenditure. However, their travel expenses will not change as they can claim them when completing their tax return.