Income Tax on Foreign Travel

In Union Budget 2020, it is proposed to widen the scope of TCS (Tax Collection at Source). The Foreign Tour Operator will be liable to collect tax (TCS). This Section will be applicable from 1st April 2020.

1. Who Is Foreign Tour Operator And What Is Overseas Tour Package?

Foreign Tour Operator is a person who typically combines travel and tour components to create a package holiday.

Overseas Tour Package is proposed to be defined to mean any tour package which offers visit to a country or countries or territory or territories outside India.

2. What Is Rate Of TCS?

TCS @5% or (@10% in case PAN/Aadhar Card is not available) u/s 206C (1G) has to be collected over and above the amount of tour package. TCS can be claimed while filing Income Tax Return.

3. When to Collect TCS by Tour Operator from Buyer?

– TCS to be collected only if foreign tour package is purchased from tour operator.

– No Threshold Limit to deduct TCS. Every foreign package will be liable for TCS   including expenses regarding travelling, boarding etc.

– TCS is applicable to every type of foreign package i.e business tour, family tour etc.

– TCS has to be collected at the time of payment or debit in books, whichever is earlier.

4. What Care Should Be Taken By Person Going On Foreign Tour?

1st: Provide PAN Details to tour operator otherwise TCS will be deducted @10% instead of @5% and also he will not be able to claim the amount of tax.

2nd: Incase of Business Foreign Tour, it must be shown in Profit/Loss A/c and in case of Personal Foreign Tour, it must be shown in Capital A/c.

3rd: All the persons going on foreign tour and not filing income tax return will now have to file Income Tax Return.

5. What Is The Intention Of Income Tax Dept And What Is The Impact Of Above TCS Provision?

It is clear that Income Tax dept. wants to keep a watch on Foreign Travelers. Now along with documents required for foreign travel like passport, visa, foreign currency, Foreign traveler has to keep watch on Income Tax provisions.

All the Expenses incurred including expense on personal foreign tour and expenses other than package of foreign tour will be recorded.

Incase of business expenditure, cash payment above Rs.10,000/- will not be allowed.

As per new returns forms for F.Y.2019-20, taxpayer is required to provide passport number and  amount spent on foreign travel if it is exceeding Rs, 2 Lakh.