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Budget 2020 proposed by Finance Minister Ms. Nirmala Sitharaman can make your dream to study overseas or enjoy an exotic holiday abroad more costlier. Reason being new provisions to collect TCS (Tax Collected at Source) introduced for from Year 2020-21 and onwards.

This Articles deals with the various issues emerging out of the said proposal. The provisions of Section 206C (1G)of Income Tax Act,1961 is given below:-

(i) Every person being a seller of an overseas tour program package, who receives any  amount from a buyer, being the person who purchases such package, shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to five per cent of such amount as income-tax:

(ii) “overseas tour program package” means any tour package which offers 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 similar nature or in relation thereto.

TCS Applicability on International Travels

Following are the issues that requires consideration:-

1. The new provisions regarding TCS on “overseas tour packages” requires that a seller of an overseas tour package shall collect TCS at the rate of 5 percent (if PAN/Aadhar is available) and 10 percent (if PAN/Aadhar is not available) on total amount from the purchaser at the time of receiving the payment for the tour package and includes expenses for travel or hotel stay or boarding or lodging.

2. There’s no threshold limit for TCS applicability. TCS shall be applicable from day one for all Tour Operators including those who have just started their business.

3. It requires every seller to collect from Buyer irrespective of their place of situation. That is if a Buyer from India is facilitated by a seller outside India to visit outside India or if a buyer out of India books a package for visit outside India, it becomes applicable.

4. It will be worth to note that TCS shall be applicable only in case of a “overseas tour package”, irrespective of the purpose of the trip. 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.

5. TCS needs to be done at the total cost collected from the buyer including GST. TCS so collected and paid should be available for tax credit in the hands of the buyer. In order to get the credit, every buyer must have PAN or Aadhar. Further Sellers of Tour Packages shall not collect TCS from those Buyers who are required to follow TDS compliance under the provisions of the Income Tax Act,1961.

Introduction of TCS will certainly increase the compliance cost of the local companies and will be contrary to the ease of doing business. It may give an unfair advantage to foreign travel firms. However as per the Government it has been introduced with an aim to plug revenue leakage.

The above article is written by Suyash Tripathi and can be reached at tripathi.r.suyash@gmail.com



Author Bio

Mr. Suyash Tripathi is a member of the Institute of Chartered Accountants of India (ICAI). He has an experience in the fields of Income Tax, International Taxation, Company Law, Banking, Finance etc. He has been conducting Statutory & Tax audit, Internal audit of large & medium scale Limited View Full Profile

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  1. Z.N.DARGAHWALA says:

    RESPECTED SIR, Iam a travel agent. If i purchase international air ticket and visa only for individual travelers whether attaract tcs? pl. reply me.

    1. Pradeep Jaiswal says:

      Sir my Question is Tcs Applicable For Corporate Client Tour for package like singapur thailand Etc, Can Collect tcs in Billing Sir .????

  2. Kavita Ghadge says:

    Dear Sir
    Please advice us on the TCS applicability on Study tour to aboard for students who are sponsored by their parents.

    Please advice.

  3. Raj Desai says:

    dear sir,

    We have booked only international hotel for our clients is tcs applicable on the same, if we paid the same to indian supplier for hotel booking then tcs responsibility on whom?

  4. Prince verma says:

    Sir. I have just started my tour and travelling business. I hv received a proposal of 10 persons tour package of dubai . Which i will buy from a certain company of dubai and will sell it to my client who will send their 10 employees to dubai on holidays. Do i need to collect tcs from my client ?

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July 2024