· To begin with all your foreign travels are going to be super expensive from 01-07-2023. Government of India came up with a new strategy to fill their treasuries in advance. · Government of India has increased the tax rate on overseas tour packages. The fancy name for this tax is Tax Collected at Source (TCS). · It means collecting the tax at the same time when the event attracting tax triggers than waiting for the year end like Final Income tax payments. · The tax rate is increased from 5% to 20%. · For Example, you want to celebrate your anniversary in Bali, and you approached an overseas tour operator who takes care of your flight tickets, accommodation, local travel etc. The package is Rs. 3,00,000. But you should pay 3,60,000 i.e., 3,00,000 + TCS of 20% to overseas tour operator. After reaching Bali, you went to a candle-light dinner costs Rs. 10,000. As you are from digital era, you will swipe your international credit card. First transaction from credit card is Rs. 10,000 then the second transaction is TCS Rs.2,000 (Again i.e., 20% on spends through credit card). Instead of all this nonsense, you have decided to buy some dollars before you go to the vacation, Still the authorized dealer who is selling you dollars will collect this tax from you @20%. This tax is as good as your pet, wherever you go and spend in foreign this tax follows you. · But this is actually not your expense, this tax reaches to government account just like your TDS on salary and the same would be refunded after setting off with your tax liability. · Still, there is a blockage of money and expiry of credit card limits which are the major side effects of this Tax medicine. · The better way to avoid this is book foreign travel tickets and accommodation on your own than going to tour operator. · However, the tax rates are very less if the travel or remittance is for education or medical treatment.
- Thrinath Gajjala
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