TCS on Foreign Travel under Income Tax Act, 1961

1. INTRODUCTION

Now foreign trip is also taxable. Govt. is taking step towards increasing tax base.  Before Corona virus hampered our life, UN World Tourism Organization (UNWTO) predicted that India will account for 50 million outbound tourists by 2020. Operators said that at present around 25 million tourists from India travel abroad — this basically implies that the number would double from current levels within the next two years. Around a decade back, eight million Indians were travelling overseas. The numbers of foreign travels were increasing before Covid-19 but only 1% of population files return of income. Looking the numbers hinting tax evasions Govt. has imposed responsibility on Seller to collect TCS from person who buys Overseas Tour Package.

2. WHAT IS OVERSEAS TOUR PROGRAMME PACKAGE?

It 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 expense of similar nature or in relation thereto.

3. WHO IS REQUIRED TO COLLECT TCS?

Tax shall be collected by seller of an overseas tour programme package.

4. WHAT IS THE RATE OF TCS?

• Tax shall be collected by seller of an overseas tour programme package @ 5% if buyer has furnished his PAN, otherwise tax shall be collected @ 10% in accordance with section 206CC.
• Rates shall be increased by applicable surcharge and health and education cess if buyer is a non-resident person or a foreign company.
• In this case rates have not been reduced due to Covid-19.

5. WHAT IS THE AMOUNT ON WHICH TAX SHALL BE COLLECTED?

Tax shall be collected on the total amount a seller receives from buyer for the overseas tour programme package.

6. IN WHICH CASES TCS SHALL NOT BE COLLECTED?

• If buyer is Government.
• If tax has been deducted under any other provisions of the Act.

7. OTHER MEASURES TAKEN BY GOVT

• From April 2019 ITR filing mandatory if any person spend more than 2 lakhs on Foreign travel.
• is thinking to include foreign travel in Statement of Financial Transaction as a result of which expenditure on foreign travel shall be reflected in Form-26AS.

8. OUR COMMENTS

There is huge population traveling in foreign countries and not filing return of income. This is bold move taken by Govt. to regulate all the non-tax payers. The Govt. is building base to widen its tax payers and in years to come things are going to change in drastic manner.