New TCS rule from subsequent month: In the Union Budget 2023, the tax assortment at supply (TCS) for international remittances underneath the Liberalised Remittance Scheme (LRS) was raised from 5% to twenty%. This can be relevant to worldwide journey, sending cash overseas, and different remittances. The increased charge of TCS is not going to apply to training bills incurred overseas or for medical causes. This new rule will come into impact from subsequent month, October 1, 2023.
International journey plans will get costlier and TCS on abroad tour packages will now entice a better TCS charge of 20% as an alternative of the earlier charge of 5% if the full spend is above ₹7 lakh. However, the 5% charge will proceed to prevail if the full price of the package deal is underneath ₹7 lakh.
“It has been clarified by the federal government that the acquisition of worldwide journey tickets and resort bookings on a standalone foundation is not going to qualify as an Overseas Tour Program Package,” said Archit Gupta, Founder and CEO, of Clear
The government has also clarified that payments made overseas using one’s credit card will remain outside the purview of TCS for the time being. Other payment modes, like debit cards, cash, and wire transfers will continue to attract TCS at the applicable rates, Gupta added.
How to minimise TCS burden
One can plan their outward remittances to minimize the TCS burden. With an example, Gupta explained that if a person has multiple outward remittances planned for the year for foreign travel, investment, education, and or medical purposes, then the first spend can be towards transactions attracting a higher rate of TCS viz, travel and investment and thereafter, remittance can be made towards education and medical purposes which attract a lower rate of TCS.
How you can reduce TCS on your foreign trip?
“This change means that limiting your total expenses to ₹7 lakhs would be a wise move to optimize your trip expenses,” Abhishek Soni CEO and Co-founder Tax2win.
Here are some suggestions that will help you save in your international travels as advised by Tax2win CEO
Avoid Packaging of the Trip: Instead of choosing a bundled tour package deal, vacationers can think about making standalone bookings for his or her abroad lodging, journey tickets, and different related bills earlier than September 30, suggested Soni.
Buy Forex in Advance: It’s advisable to chorus from last-minute foreign money alternate and, as an alternative, buy Forex upfront. “Until September 30, foreign exchange orders over ₹7 lakh can be topic to solely 5 p.c tax,” stated Soni.
Use Credit Cards with Caution: The authorities has additionally clarified that funds made abroad utilizing one’s bank card will stay outdoors the purview of TCS in the meanwhile. As per Tax2win CEO, this modification may impression your subsequent deliberate journey. Stay up to date and plan accordingly.
Disclaimer: The views and proposals made above are these of particular person analysts, and never of Mint. We advise buyers to verify with licensed consultants earlier than taking any funding selections.
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Updated: 22 Sep 2023, 02:31 PM IST
