Travel companies and industry bodies are sweating over extending the implementation of a new rule that mandates a 20 per cent tax collected at source on overseas tours set to kick in from July 1 citing the absence of a proper mechanism in place.
The government has recently raised the TCS rate on foreign remittances under the LRS from 5 per cent to 20 per cent, effective July 1, 2023. The tax collected at source (TCS) charge on credit card usage outside India will roll out on July 1, 2023 said Department of Revenue Joint Secretary Raman Chopra. Remittance is any money you send abroad.
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The travel companies also want the Rs 7 lakh TCS threshold limit to be provided for all travel services and payment models.
"I understand that banks are finding it difficult to calculate the TCS component as the reporting systems are not ready," said Jyoti Mayal, president, the Travel Agents Association of India (TAAI) and vice chairperson, the Federation of Associations in Indian Tourism & Hospitality (FAITH), as per ET report.
The government has clarified that international credit and debit card spending up to Rs 7 lakh on foreign travel will be excluded from liberated remittance scheme (LRS) limits and hence won’t attract TCS.
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But it had separately decided to increase TCS on international holiday packages to 20 per cent from July 1, a three-fold jump from 5 per cent now. The tax slab from education and medical treatment in a foreign land will remain at 5 per cent.
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