Beginning July 1, 2023, 3 Wise Strategies To Avoid 20% TCS On Overseas Tour Packages

A new tax law will go into effect on July 1, 2023, mandating those who buy international travel packages to pay a 20% tax collected at source (TCS). Compared to the existing rate of 5%, this represents a huge rise. Although you may claim the TCS as a refund when you file your income tax return, the refund procedure might take some time.

Here are three clever methods to avoid the 20% TCS and reduce the expense of your overseas travel so that you may preserve your hard-earned cash.

Use Your Rs. 7 Lakh International Debit or Credit Card Limit:

Utilising the Rs 7 lakh threshold for overseas debit or credit card payments is an efficient strategy to reduce the effects of the higher TCS. Beginning July 1, 2023, individual payments made using foreign credit cards up to Rs 7 lakh in a fiscal year would be free from TCS, according to the finance ministry. By booking a trip package via an overseas website and paying using a foreign debit or credit card, as long as the total stays within the allowed range, you may avoid paying the 20% TCS. Renu Maheshwari, CEO and principle adviser at Finzscholarz Wealth Manager and a Sebi-registered investment advisor, advises clients to keep track of their spending and make sure it stays under the limit.

 

Decide in favour of separate bookings and payments:

The new TCS regulation’s definition of a tour package is not totally clear. Instead of choosing a packaged deal, think about purchasing your flights, lodging, and excursions individually to avoid being subject to the 20% TCS. “To get around the TCS, just buy your tickets directly from airlines like Air India, Vistara, or IndiGo, and book your accommodations via the official hotel websites. To qualify for the exemption, make sure the payment is made using a debit or credit card and falls within the Rs 7 lakh limit. If you are travelling with a group, think about splitting the costs so that each person uses their Rs 7 lakh allowance, optimising savings for everyone, advises AK Narayan, CEO of financial planning company AK Narayan Associates.

 

Purchase currency abroad till June 30th, 2023

Instead of depending entirely on debit or credit cards when overseas, many travellers opt to carry foreign money or use forex cards. Make sure to buy foreign money or get a forex card before June 30, 2023, to avoid paying the higher TCS rate. It’s vital to be aware that there can be a spike in requests for currency exchange in June, which might result in delays in the delivery of cash. Plan ahead and exchange your currency before going to the airport to save time and money.

 

It is crucial to be proactive and look at methods to lessen the impact on your travel expenditures as the 20% TCS on abroad trip packages goes into effect on July 1, 2023. Make smart financial choices, prepare ahead, and stay educated to ensure that your overseas travels are both memorable and affordable.