DELHI, 3 July 2023: India has announced a three-month extension on introducing a TCS levy that adds a 20% tax on overseas tour packages and funds remitted under the Liberalised Remittance Scheme (LRS).
The new rate will kick in on 1 October instead of 1 July, a move welcomed by leading tour operators that dominate India’s highly competitive outbound travel market.
Thomas Cook (India) Limited executive director and chief executive officer Mahesh Iyer commented: We welcome the announcement to defer the proposed increase in the TCS rate for remittances under LRS. We appreciate the government’s initiative to help create a level playing field – taking on board inputs from relevant stakeholders, including travel and authorised foreign exchange players.
The clarification regarding the threshold of INR7 lakhs ( USD8,500) per individual per financial year across all modes of payment, regardless of purpose, will go a long way in aiding the buoyancy being witnessed in the travel industry, which is still recovering from two consecutive years of the impact of the global pandemic.”
The original decision on increasing the tax was included in the Union Budget 2023-24 and will now be activated on 1 October 2023.
According to local media reports, India’s Finance Ministry is giving more time to implement the revised TCS rates. “Also transactions through International Credit Cards while overseas would not be counted as LRS and hence would not be subject to TCS,” according to a statement by the Finance Ministry quoted by the business news service Mint.
Mint’s report continued: “Firstly, it has been decided that there will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of the mode of payment, for amounts up to INR7 lakh per individual per annum.
“It has also been decided to give more time for the implementation of the revised TCS rates and inclusion of credit card payments in LRS,” the finance ministry statement said.
(Source: Mint online news plus additional reporting)
