TCS on Foreign Tours & Travel
As they say, the devil lies in the details, Budget 2020 has got a lot of catches to relate to. One of the important ones is that our FM Nirmala Sitharaman has seemed to have zeroed on folks traveling abroad on foreign tours & travel, their travel plan being booked by travel agents as part of small holiday packages. This is very common now in both Govt & Private Sector employees.
Union finance minister Nirmala Sitharaman has raised alarm bells for those who travel abroad on tour package booked by others, which is a common trend to oblige senior officials in government and private sectors in the country.
Come, April 1, 2020, every foreign traveler will have to pay 5% (PAN holder) and 10% (non-PAN holder) TCS (Tax Collection at Source) on the total amount of tour package. Once the TCS is charged, total income for individuals will automatically be grossed up as liability & thus a large entity will be encircled with the realms of Income-tax department, which often escapes the TAX FILED income as per IT RETURN.
Earlier provision to mention passport number in ITR is now given more teeth to levy a tax on a large number of people, who go abroad on leisure trips several times in a year.
More often than not, there is black money involved as trips are often financed by the business houses in return for undue favors from bureaucrats, govt officials and other business entities in society. Trips can be a form of bribe or enticement in return for the aforesaid work insight.
As it may look, that every foreign visitor whether he is an income taxpayer or not will now be part of the tax gambit. However, there is a relief for people whose annual income is under the threshold limit (under Rs 5 lakh) visits a foreign country. These folks can apply for a refund of TCS from the Dept. of Income-tax.
The move is seen very effective as it will restrain the massive use of unaccounted money into the system via Foreign Tours and large no. of individuals n entities will be added newly to the mainstream Tax System @ GOI.
Industry Impact-
On top of levy of taxes, Govt intends to bank on new-age technology like DATA Analytics, etc. to retrieve information about frequent flyers who often end up spending lavishly on Global tours and travel. 5% TCS is a huge sum on the foreign travel package bill which will increase the burden of this distinctive travel class. Travel Industry is also looking to change and adapt to the new business dynamics. With all this, this can turn to abound to challenging provision for government employees and their family members, doctors, etc. who visit abroad on sponsorship.
Key Changes –
- Every foreign traveler has to pay 5% and 10% tax collection at sources (TCS) on the total amount of tour package
- Stop the practice of Concentration of Tour operators with a view of group bookings as an operator maligning the process with illicit funding via unorganised channels.
Latest Updates
- TDS Return Form 26Q: Due Dates, Applicability & Related FormsTDS Return Form 26Q: Due Dates, Applicability & Related Forms Form 26Q is a quarterly TDS return that must be filed by deductors when tax is deducted at source on payments made to resident individuals other than salaries. This includes deductions on professional fees, contractor payments, interest (excluding securities), dividends, commissions, and […]
- Have You Reported Your Foreign Assets in Your Income Tax Return?Have You Reported Your Foreign Assets in Your Income Tax Return? In an increasingly globalized world, it’s common for Indian residents to hold assets or earn income abroad. However, what many fail to realize is that the Indian Income Tax Act mandates disclosure of foreign assets and overseas income in the Income […]
- A Beginner’s Guide to E-Filing Income Tax Return for FY 2024-25A Beginner’s Guide to E-Filing Income Tax Return for FY 2024-25 Filing your Income Tax Return (ITR) is not just about fulfilling a legal formality—it’s a vital part of your financial discipline. Every individual earning income in India is required to declare their income, deductions, and taxes paid during the financial […]
- Faking Tax Deductions? You Could Be Penalised Up To 200% Under Income Tax RulesFaking Tax Deductions? You Could Be Penalised Up To 200% Under Income Tax Rules New ITR-1 and ITR-4 Mandate Detailed Proof for Claims to Curb False Deductions Paying taxes accurately and on time isn’t just a legal obligation—it fuels public welfare and national development. To ensure compliance, the Income Tax Act prescribes […]
- Aadhaar OTP a Must for PAN Registration: New Income Tax Portal RuleNew PAN Registration Rule: Aadhaar OTP Verification Made Mandatory In a significant update, the Income Tax Department has introduced a mandatory Aadhaar-based OTP verification step for individuals registering their Permanent Account Number (PAN) on the official e-filing portal — www.incometax.gov.in. This change is designed to enhance security and ensure that only genuine users […]