MUMBAI: The latest changes announced by the Union finance ministry with regard to Tax Collected at Source (TCS) levy on overseas spending on travel has brought major relief to the tourism industry and two categories of outbound travellers in particular – those who buy international tour packages and those who prefer forex cash over card, that is. The big win though is for international credit card users as transactions made abroad with these will not be subject to TCS, for now at least.
The Union finance ministry on Wednesday brought about changes under which overseas tour packages will now continue to attract a TCS of only 5 %. But for amounts above Rs 7 lakh per individual per annum, it will be 20%. Under the earlier plan, announced in this year’s budget, all overseas tour packages, irrespective of their cost, were to attract a TCS of 20%. On May 20, TOI had reported that the 20% TCS would hit senior citizens the most as this segment of travellers largely rely on tour packages for their foreign trips.
In May, the ministry had said that individuals spending up to Rs 7 lakh per financial year on foreign travel using international credit or debit card will be excluded from RBI’s Liberalised Remittance Scheme (LRS) limits and so will not attract TCS. This did not go down well with the money exchange industry. Now, the ministry has decided that there will be no TCS for travel-related payments up to Rs 7 lakh made under LRS, regardless of the mode of payment. Beyond Rs 7 lakh, a TCS of 20% would apply. Also, the increase in TCS rates shall now come into effect from October 1 and not July 1, the ministry said.
Welcoming the changes, T C Guruprasad, vice chairman of All India Money Exchange and Money Transfer Association said: “The exemption of TCS for all modes of travel-related LRS payment up to Rs 7 lakh has come as a huge relief for blue-collared workers and senior citizens as this category of travellers prefer cash to card.”
Mahesh Iyer, chief executive officer, Thomas Cook (India) Limited said: “The clarification regarding the threshold of Rs 7 lakh per individual per financial year across all modes of payment regardless of purpose will go a long way in aiding the buoyancy being witnessed in the travel industry, which is still recovering from the impact of the pandemic.”
Vishal Suri, managing director, SOTC Travel Ltd said: “We urge the government to bring overseas tour operators within the TCS ambit while implementing revised credit card guidelines to ensure a level playing field for India-based travel companies.”
About TCS exemption granted to credit card users, Guruprasad said: “Credit card holders, who generally fall under high income bracket, will use credit cards to avoid paying TCS. The money changing industry hopes that authorities concerned will take note of this and initiate steps to create a level-playing field.”
The Union finance ministry on Wednesday brought about changes under which overseas tour packages will now continue to attract a TCS of only 5 %. But for amounts above Rs 7 lakh per individual per annum, it will be 20%. Under the earlier plan, announced in this year’s budget, all overseas tour packages, irrespective of their cost, were to attract a TCS of 20%. On May 20, TOI had reported that the 20% TCS would hit senior citizens the most as this segment of travellers largely rely on tour packages for their foreign trips.
In May, the ministry had said that individuals spending up to Rs 7 lakh per financial year on foreign travel using international credit or debit card will be excluded from RBI’s Liberalised Remittance Scheme (LRS) limits and so will not attract TCS. This did not go down well with the money exchange industry. Now, the ministry has decided that there will be no TCS for travel-related payments up to Rs 7 lakh made under LRS, regardless of the mode of payment. Beyond Rs 7 lakh, a TCS of 20% would apply. Also, the increase in TCS rates shall now come into effect from October 1 and not July 1, the ministry said.
Welcoming the changes, T C Guruprasad, vice chairman of All India Money Exchange and Money Transfer Association said: “The exemption of TCS for all modes of travel-related LRS payment up to Rs 7 lakh has come as a huge relief for blue-collared workers and senior citizens as this category of travellers prefer cash to card.”
Mahesh Iyer, chief executive officer, Thomas Cook (India) Limited said: “The clarification regarding the threshold of Rs 7 lakh per individual per financial year across all modes of payment regardless of purpose will go a long way in aiding the buoyancy being witnessed in the travel industry, which is still recovering from the impact of the pandemic.”
Vishal Suri, managing director, SOTC Travel Ltd said: “We urge the government to bring overseas tour operators within the TCS ambit while implementing revised credit card guidelines to ensure a level playing field for India-based travel companies.”
About TCS exemption granted to credit card users, Guruprasad said: “Credit card holders, who generally fall under high income bracket, will use credit cards to avoid paying TCS. The money changing industry hopes that authorities concerned will take note of this and initiate steps to create a level-playing field.”
