Budget 2023: Foreign Remittances, Sale of Overseas Tour Packages To Attract 20% TCS

Moneylife Digital Team 01 February 2023

While presenting the Budget 2023, finance minister (FM) Nirmala Sitharaman proposed to increase tax collected at source (TCS) on certain foreign remittances and the sale of overseas tour packages. There is no change in the tax for education or medical purpose.

Section 206C of the Income Tax (I-T) Act provides for TCS in trading in alcohol, liquor, forest produce and scrap. Sub-section (1G) of the Section provides TCS on foreign remittance through the liberalised remittance scheme and on the sale of an overseas tour package.

The Union government has decided to increase TCS on certain foreign remittances and on the sale of overseas tour packages to 20% from the existing 5%. There will be no threshold limit for these remittances.

The proposed increase in the TCS for purchasing overseas tours and overseas remittances other than education will significantly increase the upfront cash outflow for end-customers, says Madhavan Menon, chairman & managing director (CMD) of Thomas Cook (India) Ltd. "It will drive more of these customers to use alternate channels that are outside the domestic tax net," he warns.

According to Vishal Suri, managing director of SOTC Travel Ltd, the Budget did not provide the travel and tourism industry with the respite anticipated with respect to the rationalisation of taxes. "Instead, the proposals increased TCS on outbound travel and other LRS transactions from 5% to 20% without any threshold exemption. In our view, such high rates of taxation are an added liability to outbound travellers and negatively impact tour operators recovering from the pandemic. We request the government to reconsider this proposal."

These changes will take place from 1 July 2023.

Comments

User

pgodbole

2 months ago

This provision will be a body blow to local outbound tourism industry. Most citizens who take outbound tours through Indian travel agents are either salaried individuals or have low earnings. Removal of threshold for the purpose of TCS is a regressive step. I am a pensioner, my pension is subject to TDS and I have no other source of income . I take an outbound tour through local travel agent almost every year. Now, for a tour costing Rs.1.00 lac, I will have to deposit an additional Rs.20,000 (after TDS on my full pension), which I will get as refund only next year after I file my tax return. I would rather tour locally, or book with foreign travel agents who accept tour cost in INR.