TCS Applicability on Foreign Travel, Tours packages and Remittance

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INTRODUCTION:

 A new subsection 1G is introduced in section 206C to apply tax collected at source (TCS) on the sale of overseas packages. TCS is required that the seller of the tour package will collect tax from the buyer over and above of cost of his tour package and will be deposited in the government treasury on a monthly basis seller would then be required to the quarterly file of TCS return separately.

The top ca firm in Mumbai is explain in details. 

1. TAX COLLECTED AT SOURCE (TCS) :

TCS stands for Tax Collected at the source. The tax is collected by the seller from the buyer at the time of settlement of the bill/invoice. Here, the seller shall be the collector and the buyer shall be the collected. Section 206C (1) specifies tax to be collected at source by every person, being a seller from the buyer of goods.

2. FOREIGN TRAVEL, EDUCATION BECOME COSTLY FROM 1ST APRIL BECAUSE OF TCS:

TCS on foreign travel tour packages remittance rules 2020: The new provisions regarding overseas tour packages require that sellers of foreign tour package shall collect tax at the rate of 5% and 10% if not PAN and Aadhar number submitted.

If you are planning to study abroad or enjoy an exotic holiday abroad then there is bad news for you, your dream was more expensive now as per the provisions proposed by the Nirmala Sitaraman in budget 2020. Now, new provisions to collect TCS from 1st April 2020 have been proposals TCS will be collected on:

  • Remittance under liberalized remittance scheme (LRS) of RBI for the amount exceeding Rs7 lakhs in a financial year;
  • Sale of an overseas tour package through a tour operator.

DETAILS OF THE NEW PROVISIONS

  1. TCS ON REMITTANCE:

“There was no TCS earlier, but now if a resident individual has to send money abroad through an authorized dealer in excess of Rs 7,00,000 (either one time or in totality during the financial year) then the authorized dealer must collect TCS at the rate of 5 percent at the time of remitting the money or at the rate of 10% if the remitter does not have a PAN /Aadhaar,” he said.

  1.  TCS ON TOUR PACKAGES:

The new provisions regarding TCS on overseas tour packages requires that a seller of overseas tour package shall collect TCS at the rate of 5 percent or 10 percent (if PAN /Aadhaar is not available) on the 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.

WHO IS RESPONSIBLE TO COLLECT TCS:

  1. In the case of remittance, any authorized dealer from whom the remittance is made is responsible to collect TCS.
  2. In the case of travel, the person who is the seller of the package is responsible to collect TCS.

TIMELINE FOR COLLECTION OF TCS:

At the time of receiving the amount or at the time of debiting the amount receivable whichever is earlier.

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