Budget 2020: Tax collected at source on overseas tour program packages, remittances out of India

From April 1, 2020, overseas tour programme packages and LRS will cost your more with a TCS being levied on it

Kumar Shankar Roy Feb 1, 2020

Tax collected at sourceFrom April 1, 2020, overseas tour programme packages will soon pinch you a little more.

The Union Budget has proposed widening the scope of section 206C to include TCS (tax collection at source) on selling of overseas tour package.

“A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of five per cent. In non-PAN/ Aadhaar cases the rate shall be ten per cent,” a budget document says.

Overseas tour program package is proposed to be defined to mean any tour package which offers visit to a country or countries or territory or territories outside India, and includes expenses for travel or hotel stay or boarding or lodging or any other expense of similar nature or in relation thereto.

Also, in order to widen and deepen the tax net, the government has proposed to amend section 206C to levy TCS on overseas remittance.

TCS on Liberalised Remittance Scheme (LRS)

“An authorised dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of five per cent. In non-PAN/Aadhaar cases the rate shall be ten per cent,” the budget document says.

Authorised dealer is proposed to be defined to mean a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security.

That’s not all. Section 206C is being amended to levy TCS on sale of goods above specified limit as well. So, a seller of goods is liable to collect TCS at the rate of 0.1 per cent. on consideration received from a buyer in a previous year in excess of fifty lakh rupees. In non-PAN/ Aadhaar cases the rate shall be one per cent. Only those seller whose total sales, gross receipts or turnover from the business carried on by it exceed ten crore rupees during the financial year immediately preceding the financial year, shall be liable to collect such TCS.

Both the TCS for overseas tour program package and overseas remittance, however, will not apply if the buyer is:

a. liable to deduct tax at source under any other provision of the Act and he/she has deducted such amount.

b. the Central Government, a State Government , an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person notified by the Central Government in the Official Gazette for this purpose.

These amendments will take effect from 1st April, 2020.

Budget 2020 coverage

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Budget 2020: The new optional income tax rates are low, but you can’t claim exemptions

Budget 2020: Dividend distribution tax scrapped, but shifts the burden to the recipients; high income earners to bear the brunt

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Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].