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In the 2025 Union Budget, Nirmala Sitharaman, the Finance Minister of India, has proposed certain changes to the Tax Collected at Source (TCS) provisions. The changes are done in the rate of TCS for International Travel transactions and Foreign Exchange Purchases & remittances made under the Liberalised Remittance Scheme (LRS).
In simple terms, Tax Collected at Source or TCS is a type of tax that is payable by the buyer to the seller of specific commodities, which they collect from the buyer during the time of sale (Including International Travel) and is then deposited with the Income Tax Authorities against the PAN (Permanent Account Number) of the buyer.
As per the 2025 Union Budget proposal, in a fiscal year, the new Tax Collection at Source (TCS) at the rate of 5% up to outbound tour of INR 10 lakh and 20% beyond INR 10 lakhs per individual payer per annum will be levied under section 206C(1G)(b) of the Income Tax Act on outbound tour services. The TCS collected will be reflected in the 26AS of the passenger in whose name receipt is raised (Payer/s for the package) for claiming Income Tax credit. Hence the name of the payer & the associated PAN Number on the receipt should be reconfirmed at the time of making the payment for the holiday package booking.
Yes, individuals should know that TCS can be altered against their overall income tax due and claimed when submitting their income tax returns or ITR Non-refund of TCS:In the event of cancellation of services and refund of amount, Tax collected at source under section 206C(1G)(b) of the Income Tax Act, 1961 shall not be refunded (TCS applied on the cancellation amount). The non-refunded TCS will be reflected in the 26AS of the passenger in whose name the receipt is raised for claiming Income Tax credit.
A Permanent Account Number (PAN) is mandatory for making transactions under LiberalizedRemittance Scheme (LRS).
2 Passengers are traveling together to Europe and the cost of the tour is INR 14 00 000 inclusive of GST
Passenger 1 wants to pay the entire tour cost.
Passenger 1 has declared that he/she has never utilized any amount for any International Tour package during the current financial year with any travel company including Thomas Cook
| Tour Cost incl GST | INR 14 00 000 | |
| Passenger 1 | TCS @ 5% for INR 10 00 000 | INR 50 000 |
| TCS @ 20% for INR 4 00 000 | INR 80 000 | |
| Total Payable Incl TCS | INR 15 30 000 |
2 Passengers are traveling together to Europe and the cost of the tour is INR 14 00 000 inclusive of GST
Both passengers wants to split & pay the tour cost equally.
Both the passengers have declared that they have never utilized any amount for any International Tour package during the current financial year with any travel company including Thomas Cook
| Tour Cost incl GST | INR 14 00 000 | |
| Passenger 2 | Wants to make payment of INR 7 00 000 | INR 70 000 |
| TCS @ 5% for INR 7 00 000 | INR 35 000 | |
| Total Payable Incl TCS | INR 7 35 500 | |
| Passenger 1 | Wants to make payment of INR 7 00 000 | INR 70 000 |
| TCS @ 5% for INR 7 00 000 | INR 35 000 | |
| Total Payable Incl TCS | INR 7 35 500 | |
| Total Payable incl TCS for Passenger 1 + Passenger 2 combines | INR 14 70 000 |
2 Passengers are traveling together to Europe and the cost of the tour is INR 14 00 000 inclusive of GST
Both passengers wants to split & pay the tour cost equally.
Both the passengers have declared that they have utilized some amount for an International Tour package during the current financial year with Passenger 1 utilizing with one of the travel companies outside of Thomas Cook & Passenger 2 utilizing with Thomas Cook as well as a travel company outside of Thomascook.
| Tour Cost incl GST | INR 14 00 000 | |
| Passenger 1 | Wants to make payment of INR 7 00 000 | INR 70 000 |
| Declaration submitted for using INR 4 00 000 for a previous International Holiday with another travel company | ||
| TCS @ 5% for INR 6 00 000 | INR 30 000 | |
| TCS @ 20% for INR 1 00 000 | INR 20 000 | |
| Total Payable Incl TCS | INR 7 50 000 |
| Tour Cost incl GST | INR 14 00 000 | |
| Passenger 2 | Wants to make payment of INR 7 00 000 | INR 70 000 |
| Declaration submitted for using INR 3 00 000 for a previous International Holiday with THOMAS COOK | ||
| Declaration submitted for using INR 3 00 000 for a previous International Holiday with another travel company | ||
| TCS @ 5% for INR 4 00 000 | INR 20 000 | |
| TCS @ 20% for INR 3 00 000 | INR 60 000 | |
| Total Payable Incl TCS | INR 7 80 000 | |
| Total Payable incl TCS for Passenger 1 + Passenger 2 combines | INR 15 30 000 | |
To know more on TCS International Packages
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