Foreign tour packages set to be dearer

The higher rate of 20 per cent TCS to be levied on spending above Rs7 lakh on foreign tour packages and liberalised remittance scheme (LRS) will kick in from October 1.

Currently, funds transferred overseas under the Reserve Bank’s LRS attract five per cent Tax Collection at Source (TCS) on amounts exceeding Rs7 lakh.

The TCS rate will go up to 20 per cent from October 1. Currently, LRS transfers up to Rs7 lakh in a fiscal do not attract any TCS. The same provision will continue from October 1. At present, purchase of overseas tour packages currently attracts 5 per cent TCS.

From October 1, such spending up to Rs7 lakh will attract five per cent TCS. Above the threshold, TCS rate will be higher at 20 per cent. An assessee can take credit of the TCS amount paid at the time of filing income tax returns for the relevant assessment year.

TCS of 5 per cent will continue to be levied on annual expenses exceeding Rs 7 lakh towards medical treatment and education each.