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Planning an international trip? It's essential to get acquainted with the new regulations and explore methods to safeguard your finances.
For instance, if you're gearing up for a Rs 3,00,000 European vacation through a local travel agency, be prepared for a 20% TCS charge on the tour package. This means you'll need to shell out an additional Rs 60,000 as TCS when booking your tour.
Likewise, when purchasing foreign currency from an authorized dealer for your international getaway, a 20% TCS will be tacked on. Even loading a Forex card with funds before your trip will incur a 20% TCS.
While you can claim a TCS refund while filing your income tax return, the refunded amount remains inaccessible until the subsequent financial year.
That said, strategies exist to help you mitigate this avoidable expense and potentially save on additional costs.
Three Ways to Dodge the 20% TCS During Your Next Overseas Adventure:
Opt for tour packages available on international websites and make payments using an international debit or credit card. Starting July 1, 2023, the finance ministry has waived TCS on individual payments made via international debit or credit cards, up to Rs 7 lakh in a financial year.
A 20% TCS applies to overseas tour packages, but the definition of a "tour package" is somewhat ambiguous. To sidestep TCS, individuals can opt to book flights, accommodations, and sightseeing components separately, thereby avoiding the formation of a package that attracts TCS.
No TCS will be levied if you directly purchase your flight ticket from airlines like Air India, Vistara, or IndiGo. Similarly, booking your hotel directly through the hotel's website and making payment with a debit or credit card will exempt you from TCS, as long as the amount remains under the Rs 7 lakh threshold.
Many travelers prefer purchasing foreign currency or utilizing a Forex card over relying solely on their debit or credit cards when journeying abroad.
Given that the RBI allows the purchase of foreign currencies or Forex travel cards up to 60 days before the travel date, it's wise to procure foreign currency or a Forex card by June 30, 2023, to evade higher TCS charges.
If you have travel plans from now through the end of August, consider seizing this opportunity to purchase your foreign currencies or Forex travel cards before the end of June. This can also explain the current surge in forex prices
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