Complete Guide to TCS when Remitting Foreign Travel Expenses from India

Overseas tour packages offer a convenient way for Indians to travel abroad, with companies often handling travel tickets, hotel bookings, dining, and sightseeing arrangements. However, if your overseas tour package booking requires you to send money abroad, you may need to consider the Tax Collected at Source (TCS) regulations.

The government of India has introduced TCS on remittances for overseas tour packages. Don't worry, TCS isn't an extra fee! It is an advance tax payment that will be adjusted against your income tax liability when you file your returns. Read on to learn how TCS applies to foreign travel and how it might impact your upcoming trip. We'll also introduce you to Wise — a convenient option for remitting travel expenses from India.

🚨 Budget 2025 Update: TCS on Travel Expenses

In the 2025 Budget Speech, the threshold for collecting TCS on remittances under RBI’s Liberalized Remittance Scheme (LRS) has been raised from INR 7 lakh to INR 10 lakh.

What is TCS on Foreign Travel?

TCS on foreign remittances generally applies to all money transfers exceeding INR 10,00,000 made during a financial year under the Liberalised Remittance Scheme. The TCS rates vary based on the purpose of the remittance—whether it is for medical expenses, education, gifts, or travel.

While most overseas remittances below INR 10,00,000 in a financial year do not require TCS, this exemption does not apply to overseas tour packages. TCS is applicable on all remittances for overseas tour packages, with different rates for amounts above INR 10,00,000. If you are paying for your own holiday (and not via a company), you only need to pay TCS on the amount exceeding INR 10 lakhs. ²

It’s important to note that the tax withheld from foreign travel expenses is often mistakenly referred to as TDS (Tax Deducted at Source), while it is actually TCS (Tax Collected at Source). TCS refers specifically to tax collected at the source, whereas TDS involves tax deducted at the source.

Also, remember that TCS on foreign travel is separate from GST and other taxes related to travel services or money transfer services, meaning TCS is collected in addition to any GST on services.

One key benefit of TCS is that you may claim a refund for the amount when filing your Income Tax Return (ITR). For instance, if the TCS paid in 2024 exceeds your tax liability for the financial year, you can claim an appropriate refund.

TCS Rates on Foreign Travel from India

The Ministry of Finance lists out the TCS rates on overseas tour program packages under LRS, effective from 1 April 2025:³

An overseas tour package is defined as a program that includes travel to any country outside India along with expenses for travel, accommodation (with or without food), and similar expenditures. Note that purchasing only international travel tickets or hotel accommodation does not qualify as an overseas tour package.

TCS is only applicable to money transfers or purchases made using debit or Forex cards. Payments made using international credit cards fall outside the LRS, so no TCS is applied to such transactions.

How to Pay TCS for Foreign Travel

Authorized dealers—such as travel agencies, overseas tour operators, and money transfer service providers—are responsible for collecting TCS when booking an overseas tour package. TCS is applicable even if you book your tour package through domestic online travel portals like Yatra.com, MakeMyTrip.com, or EaseMytrip.com, and make payments in Indian Rupees.

Keep in mind that the guidelines are still unclear on whether foreign websites should collect TCS from Indian customers when booking overseas tour packages.⁴

How to check for TCS deducted

When TCS is deducted, the amount is deposited with the Income Tax Department. The following documents can help you determine the TCS paid so you can file your ITR accurately:⁵

1. Form 27D or TCS Certificate: The overseas tour service provider will issue this certificate, detailing the TCS collected and paid to the government.
2. Form 26AS: Available on the income tax e-portal, this form details all TCS and TDS paid to the government against your PAN.
3. Other statements: You can also download your AIS (Annual Information Statement) or TIS (Tax Information Statement) from the income tax e-portal to review the TCS deducted.

Keeping track of the TCS paid, along with your travel booking receipts, will make it easier to file a claim for a refund later.

How to claim TCS Refund on Foreign Travel

Remember, TCS is not an extra fee but a tax that has been paid to the government. Since it is adjusted against your overall tax liability, you can claim a refund if the TCS paid exceeds your final tax obligation.

Is TCS on Foreign Travel Refundable?

The TCS paid for international money transfers or overseas tour packages is adjusted against your income tax return. Depending on your tax liability, you can claim a refund for any excess amount. It becomes fully refundable if you have no tax liability.

Additionally, if you cancel your travel plans shortly after booking, you might be eligible to receive a refund for the TCS deducted.

Step-by-step guide for claiming TCS

Here are the steps for how to claim TCS on foreign travel:⁶

1. Collect your TCS certificate: Obtain Form 27D from your service provider, which details the TCS deducted and deposited with the Income Tax Department.
2. Verify with your Form 26AS: Visit the income tax e-portal and download your Form 26AS for the financial year, then cross-check it with the details in Form 27D.
3. Keep other documents ready: Retain your tickets, receipts, and any other relevant documents before filing your ITR.
4. File your ITR: Include the TCS details in the appropriate section of your ITR, along with the details of your remittances and deductions mentioned in Form 27D.
5. Get your refund: The IT Department will reconcile your tax liability and refund any excess TCS to your registered bank account.

How to Avoid TCS on Foreign Travel

While it’s not advisable to avoid TCS unlawfully, there are some strategies that may help you manage your TCS liability:⁷

• Alternative to overseas tour package: The government specifically classifies overseas tour packages based on a combination of two or more expenses—international travel tickets, hotel accommodation (with or without food), and other similar expenses. Splitting up your package by booking travel tickets and hotel accommodations separately may prevent your remittance from being classified as an overseas tour package, helping you stay below the TCS threshold.
• Share travel expenses: Since the TCS threshold applies per sender, splitting expenses among different family members can reduce your individual TCS liability. For example, one person can book flight tickets while another pays for hotel accommodation, ensuring that each individual’s expense remains below INR 10,00,000.
• Book through foreign websites: Currently, foreign websites do not collect TCS from their customers. However, always ensure the website is legitimate by checking customer reviews and other indicators of reliability.
• Use credit cards: Paying with an international credit card for overseas travel expenses can help avoid TCS, though you should be aware of potential interest charges and international transaction fees.

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