Traveling abroad will become more expensive from October 1, with 20 percent TCS levied on expensive tour packages and foreign remittances starting at Rs 7 lakh.

RBI Liberalized Remittance Scheme: From October 1, foreign tour packages will become more expensive. Now 20 percent TCS (Tax Collected at Source) has to be paid on tour packages of more than 7 lakhs which was earlier 5 percent. Under RBI's LRS (Liberalized Remittance Scheme), foreign remittances will have to pay 20 per cent TCS from October 1, 2023, up from 5 per cent TCS till now. Earlier, the rule was to come into effect from July 1, 2023, but the government decided to implement it from October 1, giving an extension of three months.

Foreign travel will be expensive

Those going abroad on tour packages will be hit the hardest by this decision of the government. 20 percent TCS will be levied on tour packages worth more than Rs 7 lakh. Currently, 5 percent TCS is payable on foreign tour packages and there is no minimum limit. However, under the new rule, Rs. 20 percent TCS has to be paid on tour packages worth more than 7 lakhs, while Rs. 5 percent TCS will continue on tour packages priced below 7 lakhs. Tour operators believe that the government's 20 percent TCS decision could have an impact on the tourism industry. The Travel Agents Association of India has demanded the government to abolish 20 percent TCS on foreign travel packages. He says that domestic tour operators will suffer due to this.

This decision will not affect the expenditure on medical or education abroad above Rs 7 lakh. But like the old regime, 5 per cent TCS will continue to be levied on medical and education expenses above Rs 7 lakh.

Higher tax on foreign remittances

The increase in TCS under RBI's LRS earlier included spending on international credit cards abroad, but the decision on TCS on credit cards has been deferred as the government takes time to prepare for this change from banks and card networks.

The finance ministry then argued that payments made through debit cards are included in LRS but spending abroad through credit cards is not. Due to which many people used to cross this limit while making credit card payments. The RBI has written to the government several times asking it to end the discrimination in debit and credit payments abroad.

It was announced in the budget

In the budget presented on February 1, 2023 for the financial year 2023-24, Finance Minister Nirmala Sitharaman announced an increase in TCS rate from 5 percent to 20 percent on foreign travel packages and remittances under LRS, effective from July 1, 2023. was going to happen. But the government gave three months more respite. Which will be applicable from October 1, 2023. The government completely rejected the demand to reduce the TCS rate.

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