TCS rules on foreign expenditures is a mess
The new TCS rules for foreign expenditure in force from 1st Oct are a massive mess! No one knows what is to be followed. Instructions are not clear; there seem to be so many interpretations resulting in so much whataboutery by everyone you talk to!
1. 5% TCS is applicable on tour packages if the expense is less than 7 lakhs per annum & 20% if it is more than 7 Lakhs per person
(How is anyone to know how much this client has spent already? So it is suggested that travel agents take a declaration from the client - but then does the onus lie on us if the client is dishonest)
2. No TCS on "only hotel bookings" but there is 5% or 20% TCS if it is a Tour Package. So if client books the hotels thru a travel agent but books trains and car online then technically he is going on a tour, but the travel agent is not going to charge TCS
3. Online portals are in a spin themselves - collecting PAN cards, charging or not charging TCS. Banks are going haywire sending communications which are a whole lot of mumbo-jumbo. Credit Card payments are being made but waits to be seen how this will be dealt with. definitely there will be questions by card-holders with their interpretations of the TCS rules and what the expense was for.
4. A lot of b2b business happens within the industry. That confusion is at a whole new level currently!
Travel Industry chat groups & sub-groups are burning up with this issue. Everyone is second-guessing the other. Everyone's CA has a divergent view.
There is one circular issued by the Govt of Finance on the 30th of June 2023 which tries to clarify things but that is also being interpreted in various ways.
What an environment to do business!!!
5% TCS on everything was working fine. They should have just continued with that - both online and offline. Now that the banks are even ready with their systems, just charge your 5% on every foreign spend and be done with it. more
1. 5% TCS is applicable on tour packages if the expense is less than 7 lakhs per annum & 20% if it is more than 7 Lakhs per person
(How is anyone to know how much this client has spent already? So it is suggested that travel agents take a declaration from the client - but then does the onus lie on us if the client is dishonest)
2. No TCS on "only hotel bookings" but there is 5% or 20% TCS if it is a Tour Package. So if client books the hotels thru a travel agent but books trains and car online then technically he is going on a tour, but the travel agent is not going to charge TCS
3. Online portals are in a spin themselves - collecting PAN cards, charging or not charging TCS. Banks are going haywire sending communications which are a whole lot of mumbo-jumbo. Credit Card payments are being made but waits to be seen how this will be dealt with. definitely there will be questions by card-holders with their interpretations of the TCS rules and what the expense was for.
4. A lot of b2b business happens within the industry. That confusion is at a whole new level currently!
Travel Industry chat groups & sub-groups are burning up with this issue. Everyone is second-guessing the other. Everyone's CA has a divergent view.
There is one circular issued by the Govt of Finance on the 30th of June 2023 which tries to clarify things but that is also being interpreted in various ways.
What an environment to do business!!!
5% TCS on everything was working fine. They should have just continued with that - both online and offline. Now that the banks are even ready with their systems, just charge your 5% on every foreign spend and be done with it. more
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This provision should be scrapped immediately. It is retrograde, prevents the ease of doing transactions, people unfriendly and serves no real purpose other than harassment and increase in transactional costs. more
Oct 05
A Thought Less action at Unwanted Time . Reverse to the Good old days better than later. more
Oct 04
it is in a mess what was the necessity of this.Unless it is done in a way as not to harass overseas travellers then only it will be effective and people will try to find loopholes in this.Already GSt collections are high and instead of giving benefits to sr citizens who have been deprived a lot in these hardtimes govt is not doing anything more
Oct 04
True... firstly, if I have multiple Credit cards, each of who does not know how much forex am spending on the other... how do they know if I have reached the 7 lakhs limit? who will levy the 20% TCS ? Then again, If the Travel Agent breaks up the tour bookings and separates tickets, hotels and actual packages in 3 different parts paid to 3 agencies (in name of self, son & wife), then no TCS - defeats the purpose behind levying the TCS... and believe me, many will do this jugaad ! If the government is concerned that so many Indian travelling abroad and so few of them paying income tax, thats cause many spending undeclared cash are not bothered with filing returns to claim the small 5% TCS .... so just increase this to 10%... and no forex to be sold or foreign travel permitted to those who have not filed Tax returns! But please do away with this 20% nonsense! more
Oct 04
