Planning your next international vacation? If you’ve got your sights set on exploring Europe, Southeast Asia, or the US, there’s a critical financial detail you shouldn’t overlook: TCS on foreign tour packages. With recent changes to tax laws in India, this small acronym could have a big impact on your travel budget.
This guide breaks down what TCS is, how it applies to your trips abroad, and how you can plan smartly to reduce the impact.
What is TCS on Foreign Tour Packages?
TCS (Tax Collected at Source) is a tax collected by sellers (like tour operators) when you purchase certain services. For foreign travel, it applies when you book a complete overseas tour package through a registered provider in India.
From April 1, 2025, if your total annual spending on foreign tour packages exceeds ₹10 lakh, a steep 20% TCS is applicable. Transactions up to this threshold are taxed at a 5% rate.
This tax change, brought under the Liberalized Remittance Scheme (LRS), is part of the Indian government’s effort to increase transparency and compliance around high-value international transactions.
Save big on your every international money transfer!
Send money at the lowest exchange rates & ZERO convenience fees with moneyHOP.
Updated TCS Rates on Foreign Tour Packages in 2025
| Type of Foreign Remittance | Threshold Limit | TCS Rate |
| Overseas tour packages | Up to ₹10 lakh | 5% |
| Overseas tour packages | Above ₹10 lakh | 20% |
| Travel (without package) | Up to ₹10 lakh | None |
| Travel (without package) | Above ₹10 lakh | 20% |
The TCS on foreign tour packages applies only when a full package is purchased through a travel agency or platform, not on standalone hotel or flight bookings made directly.
Explore TCS exemptions on international money transfers
Why Was TCS on Foreign Tour Packages Increased?
The government introduced the increased TCS rate primarily to:
- Widen the tax net
- Monitor high-value overseas expenses
- Improve compliance under LRS
This allows the Income Tax Department to track large foreign remittances and ensure they align with income declarations. While it’s not an additional cost (you can claim it back when filing ITR), it does increase your immediate outflow.
How to Calculate TCS on Foreign Tour Packages?
Let’s say you book a travel package worth ₹12 lakh:
- First ₹10 lakh is taxed at 5% = ₹50,000
- Remaining ₹2 lakh is taxed at 20% = ₹40,000
- Total TCS = ₹90,000
That’s an additional ₹90,000 out-of-pocket—just for tax. Planning smartly makes all the difference.. That’s why understanding TCS on foreign tour packages is essential while budgeting.
Does TCS Mean Additional Tax Burden?
Not really. TCS is not an expense you lose. You can:
- Adjust it against your income tax liability
- Claim a refund while filing returns
But yes, the cash flow impact is real. You pay more upfront and recover later. For many, especially salaried travelers, this could temporarily strain liquidity.
Before we dive into how you can reduce your TCS burden, let’s take a look at how different types of travelers are impacted under the new rules in 2025.
Tips to Reduce TCS Impact While Travelling Abroad
- Stay Within Threshold: Try to keep your travel costs under ₹10 lakh annually to be eligible for the lower 5% rate.
- Split Bookings: Book flights, hotels, and activities separately instead of choosing a bundled package.
- Use Education/Medical Purpose if Legitimate: If your travel is for education or health purposes, lower TCS rates (0.5%-5%) apply.
- Spread Across Family Members: Distribute expenses among family members if traveling together. Each individual has a ₹10 lakh limit.
- Check if You Can Claim as Business Expense: Entrepreneurs or freelancers can evaluate if travel qualifies as a deductible expense.
Discover the best ways to send money abroad from India in 2025
Who Collects TCS on Tour Packages?
The travel agency, tour operator, or platform that sells you the package is responsible for collecting TCS. They deduct it at the time of booking and deposit it with the government under your PAN number.
You can view the collected amount in your Form 26AS or AIS (Annual Information Statement) on the Income Tax portal.
TCS on Foreign Tour Packages vs Other International Remittances
The 20% TCS rate on foreign tour packages is among the highest in the revised LRS system. Here’s how it compares:
- TCS on foreign education via loan: 0.5%
- TCS on medical treatment abroad: 5%
- TCS on foreign investment: 20%
- TCS on international gift transfers: 20%
This shows how travel and luxury-related expenses are being more closely monitored.
Find out how to legally avoid paying 20% TCS on foreign remittances
What if You Cancel Your Tour?
If the tour package is cancelled, you are eligible for a TCS refund provided the tour operator reverses the transaction and returns the tax. You should receive a TCS certificate (Form 27D) and ensure it’s reflected in your Form 26AS.
TCS Refund Process
Claiming a refund is simple:
- File your ITR (Income Tax Return)
- Declare the TCS amount paid under “TDS/TCS Details”
- Adjust it against your tax liability or claim a refund
Make sure your PAN is correctly shared with the tour operator to reflect the TCS in your Form 26AS.
Learn how to claim a refund on TCS for international remittances
Why Use HOP Remit by moneyHOP for Your International Transfers?
If you’re planning to travel abroad, managing payments smartly is just as important as booking the right itinerary. HOP Remit by moneyHOP is an all-digital remittance platform designed specifically for individuals who want a faster, more transparent, and cost-effective way to send money overseas.
With HOP Remit, you can:
- Track all charges transparently—no hidden fees
- Get the best exchange rates with near-zero markups
- Transfer funds for travel, education, or family maintenance purposes
- Upload all documents digitally for TCS compliance and record-keeping
- Enjoy 24/7 human assistance and regulatory compliance built-in
Whether you’re booking a foreign tour package or sending travel funds abroad, HOP Remit helps you do it smarter—with full transparency and real savings.
Get Started with HOP Remit Today
Take control of your international payments—download the HOP Remit app and send money abroad with confidence. Enjoy market-best exchange rates, ultra-low transfer fees, and the peace of mind of full RBI compliance.
Start your journey here: www.moneyhop.co
Why pay more for international money transfers when moneyHOP is here?
- NO hidden fees
- ZERO convenience fees
- Real-time updates
- Lowest exchange rates
Final Thoughts
With changing tax dynamics, understanding TCS on foreign tour packages is more important than ever. The 20% upfront cost can disrupt your travel plans unless planned wisely. But knowledge is power—and with strategic decisions like splitting bookings, using legitimate exemptions, and claiming refunds, you can reduce its impact.
International travel is still very much within reach. All you need is some smart planning and awareness of how the tax system works.
Ready to make every rupee count? Choose HOP Remit by moneyHOP—trusted by thousands of travelers for smart, seamless, and fully transparent international transfers.
Leave a Reply