TCS on overseas tour packages
1. Why is TCS levied?
As per section 206C(1G), TCS applies to all foreign travel related expenditure. An overseas tour package is defined to include more than one travel product sold to passengers for travelling outside India. The travel agent or guest must collect or pay TCS on the overseas tour package, as well as on a single travel product, at the rates below:
| Particular | Standalone hotel (single travel product) | Overseas tour package |
|---|---|---|
| Cumulative remittance under LRS against PAN does not exceed 7 lakh in the financial year | NIL | 5% |
| Cumulative remittance under LRS against PAN exceeds 7 lakh in the financial year | 20% | 20% |
2. Is buying only an international ticket or only a hotel stay an overseas tour package?
An overseas tour package means any tour package that offers a visit to one or more countries or territories outside India and includes expenses for travel, hotel stay, boarding, lodging or any other expenditure of a similar nature.
Buying only an international travel ticket, or only hotel accommodation, is not by itself an overseas tour program package. To qualify, the package must include at least two of the following:
- international travel ticket,
- hotel accommodation (with or without food), boarding or lodging,
- any other expenditure of a similar nature or in relation to these.
3. Does the Rs 7 lakh threshold apply separately to each half of the financial year?
No. The Rs 7 lakh threshold applies to the full financial year. Once it is used up, every later remittance under LRS, in either half of the year, is liable for TCS at the applicable rate.
4. Can multiple PANs be entered while booking?
Yes. The agent or guest can enter the PANs of several passengers on the booking page and give the ratio for splitting the TCS.
5. Is TCS an additional cost?
No. TCS is fully adjusted against the passenger's income tax liability for that financial year, so it is not an additional cost.
6. Do I need to submit any proof or documents to TripZens?
Yes. For bookings above 7 lakh we need proof of the TCS deposit along with the TCS certificate at the end of every quarter. Travel agents should keep the TCS certificate and any other documents required from time to time ready.
7. Which PAN should be used while booking?
The PAN must be valid and operative, and must belong to the traveller or the corporate as applicable, not to the travel agent.
8. Must the PAN be linked with Aadhaar?
Yes. The government deadline to link PAN with Aadhaar was 30 June 2023. The PAN of anyone who has not linked it is inoperative, so please make sure the PAN is linked with Aadhaar.
9. Which declarations are needed from the traveller?
- The amount of the LRS limit used against the traveller's PAN in the current financial year.
- That the LRS limit used against the traveller's PAN in the current financial year has not exceeded USD 250,000 or the limit approved by RBI.
- When several travellers are booked with one or more PANs: from each passenger whose PAN is entered, that their LRS limit will be used for the travel of the other passengers.
- For corporate bookings: that the corporate has authorised the travel agent to make the booking, and that the travellers are its employees whose expenses the corporate will bear.