TCS on Foreign Tour Packages FY 2026-27 \u2014 5% vs 20% Threshold Explained
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Latest TCS Rules, Rate, Threshold, Examples, Compliance & Practical Guide
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Introduction<\/p>\n
International travel has become increasingly common for Indians, whether for leisure, business, family vacations, education-related travel or organised overseas tours. Along with the cost of flights, hotels and other travel services, travellers purchasing an overseas tour programme package also need to understand the Tax Collected at Source (TCS) provisions.<\/p>\n
TCS on overseas tour programme packages has undergone significant changes in recent years.<\/p>\n
Under the earlier framework applicable up to FY 2025-26, the commonly discussed structure was:<\/p>\n
5% TCS up to \u20b910 lakh, and
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20% TCS on the amount exceeding \u20b910 lakh.<\/p>\n
However, this is not the correct rate for FY 2026-27.<\/p>\n
From 1 April 2026, the new tax framework has rationalised the provision. TCS on the sale of an overseas tour programme package is now prescribed at 2% irrespective of the amount. The \u20b910 lakh threshold for applying the higher 20% rate has been removed.<\/p>\n
Therefore, anyone preparing invoices, accounting entries, TCS returns or tax-compliance content for FY 2026-27 should be particularly careful not to carry forward the old 5%\/20% calculation.<\/p>\n
1. What Is TCS on an Overseas Tour Package?<\/p>\n
TCS means Tax Collected at Source.<\/p>\n
In the case of an overseas tour programme package, the responsibility to collect TCS generally falls on the seller of the overseas tour programme package.<\/p>\n
In simple terms:<\/p>\n
When a customer purchases a qualifying overseas tour programme package from a tour operator, the tour operator collects TCS from the customer and deposits that amount with the Government.<\/p>\n
The amount collected is not normally an additional final tax burden for the customer. It is generally available as tax credit, subject to proper reporting and matching in the taxpayer’s tax records.<\/p>\n
2. Which Provision Applies?<\/p>\n
For the earlier framework, the provision was contained in Section 206C(1G) of the Income-tax Act, 1961.<\/p>\n
However, FY 2026-27 is also important because the Income-tax Act, 2025 comes into effect from 1 April 2026, with the corresponding TCS provisions placed under the new framework.<\/p>\n
The Finance Bill 2026 specifically refers to Section 394 of the Income-tax Act, 2025 for TCS and rationalises the rates for overseas tour programme packages.<\/p>\n
Thus, professionals dealing with FY 2026-27 transactions should be careful about the applicable statutory reference rather than continuing to use only the old Section 206C references.<\/p>\n
3. The Biggest Change for FY 2026-27<\/p>\n
This is the most important update.<\/p>\n
Earlier framework \u2014 FY 2025-26
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Package amount\tTCS
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Up to \u20b910 lakh\t5%
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Amount exceeding \u20b910 lakh\t20%
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FY 2026-27
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Package amount\tTCS
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Any amount\t2%
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\u20b910 lakh threshold\tRemoved
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20% higher rate\tNot applicable to overseas tour package<\/p>\n
The Finance Bill 2026 expressly proposed removal of the \u20b910 lakh threshold for the higher 20% TCS rate and prescribed 2% irrespective of the amount for sale of an overseas tour programme package, effective from 1 April 2026.<\/p>\n
4. Why Are People Still Searching for 5% vs 20%?<\/p>\n
The confusion exists because the 5%\/20% structure was applicable under the earlier regime.<\/p>\n
The Income-tax Department’s TCS information for the earlier framework describes:<\/p>\n
5% on overseas tour programme packages up to \u20b910 lakh; and
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20% on the amount exceeding \u20b910 lakh.<\/p>\n
Therefore, articles, old software settings, previous-year calculators and older FAQs may still display the 5%\/20% structure.<\/p>\n
But for FY 2026-27:<\/p>\n
Do not apply the old 5%\/20% calculation.<\/p>\n
The applicable rate is 2%.<\/p>\n
5. What Is an Overseas Tour Programme Package?<\/p>\n
The nature of the transaction is important.<\/p>\n
The provision applies to the sale of an overseas tour programme package.<\/p>\n
Therefore, businesses should not mechanically classify every international travel-related transaction as an overseas tour programme package without examining the actual arrangement.<\/p>\n
For example, the following should be separately examined:<\/p>\n
International flight ticket;
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Hotel booking;
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Travel package;
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Group tour;
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Holiday package;
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Cruise package;
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Travel + hotel package;
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Travel + accommodation + sightseeing package.<\/p>\n
The contractual structure and actual nature of the package should be reviewed.<\/p>\n
6. Is Every Foreign Flight Ticket Subject to This TCS?<\/p>\n
Not necessarily.<\/p>\n
A standalone international air ticket should not automatically be treated as an overseas tour programme package merely because the destination is outside India.<\/p>\n
The specific statutory definition and nature of the arrangement should be examined.<\/p>\n
For a tour operator, this distinction is important because incorrect classification can result in:<\/p>\n
Excess TCS collection;
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Short TCS collection;
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Customer complaints;
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Reconciliation problems;
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Incorrect TCS returns.
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7. Is a Standalone Hotel Booking an Overseas Tour Package?<\/p>\n
Again, not automatically.<\/p>\n
A standalone overseas hotel reservation and a bundled overseas tour programme are not necessarily the same transaction.<\/p>\n
For example:<\/p>\n
Case A<\/p>\n
Customer purchases only:<\/p>\n
Dubai Hotel \u2014 \u20b91,50,000<\/p>\n
The transaction should be examined based on its actual nature.<\/p>\n
Case B<\/p>\n
Customer purchases:<\/p>\n
Delhi\u2013Dubai return flight;
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Hotel;
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Airport transfer;
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Sightseeing;
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Local transportation;<\/p>\n
as one organised overseas tour package.<\/p>\n
This is much more clearly a package arrangement requiring consideration under the overseas tour programme provisions.<\/p>\n
8. FY 2026-27 Rate \u2014 2%<\/p>\n
For transactions falling in FY 2026-27, the applicable TCS rate for sale of an overseas tour programme package is:<\/p>\n
2%<\/p>\n
There is no separate:<\/p>\n
5% slab;
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20% slab;
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\u20b910 lakh trigger for the higher rate.<\/p>\n
The Finance Bill 2026 specifically states that TCS on sale of an overseas tour programme package will be collected at 2% irrespective of the amount from 1 April 2026.<\/p>\n
9. Example \u2014 Tour Package of \u20b95 Lakh<\/p>\n
Suppose:<\/p>\n
Overseas tour package = \u20b95,00,000<\/p>\n
TCS:<\/p>\n
\u20b95,00,000 \u00d7 2%<\/p>\n
= \u20b910,000<\/p>\n
Customer payment
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Particular\tAmount
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Tour package\t\u20b95,00,000
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TCS @ 2%\t\u20b910,000
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Total collected\t\u20b95,10,000
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10. Example \u2014 Tour Package of \u20b910 Lakh<\/p>\n
Suppose the package value is:<\/p>\n
\u20b910,00,000<\/p>\n
TCS:<\/p>\n
\u20b910,00,000 \u00d7 2%<\/p>\n
= \u20b920,000<\/p>\n
Total:<\/p>\n
\u20b910,20,000<\/p>\n
There is no special treatment merely because the package value reaches \u20b910 lakh.<\/p>\n
11. Example \u2014 Tour Package of \u20b915 Lakh<\/p>\n
Suppose:<\/p>\n
Overseas tour package = \u20b915,00,000<\/p>\n
Under FY 2026-27:<\/p>\n
TCS = \u20b915,00,000 \u00d7 2%<\/p>\n
= \u20b930,000<\/p>\n
Important<\/p>\n
The old calculation would have required a split between the lower and higher rates.<\/p>\n
That calculation should not be used for FY 2026-27 transactions.<\/p>\n
12. Example \u2014 Tour Package of \u20b925 Lakh<\/p>\n
Package:<\/p>\n
\u20b925,00,000<\/p>\n
TCS @ 2%:<\/p>\n
\u20b950,000<\/p>\n
Customer’s total payment, assuming TCS is separately collected:<\/p>\n
\u20b925,50,000<\/p>\n
Again, there is no 20% TCS on the amount above \u20b910 lakh under the FY 2026-27 overseas tour package provision.<\/p>\n
13. Comparison: FY 2025-26 vs FY 2026-27
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Particular\tFY 2025-26\tFY 2026-27
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Up to \u20b910 lakh\t5%\t2%
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Above \u20b910 lakh\t20%\t2%
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\u20b910 lakh threshold\tApplicable\tRemoved for higher rate
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Higher 20% rate\tApplicable above threshold\tNot applicable to tour package
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Effective date\tUp to 31 March 2026\tFrom 1 April 2026
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Main compliance framework\tSection 206C(1G), IT Act 1961\tSection 394, IT Act 2025<\/p>\n
The Finance Bill 2026 clearly provides that these changes take effect from 1 April 2026.<\/p>\n
14. The \u20b910 Lakh Threshold \u2014 What Happened?<\/p>\n
The \u20b910 lakh figure has not disappeared from every TCS rule.<\/p>\n
This is where another major confusion can arise.<\/p>\n
The \u20b910 lakh threshold continues to be relevant for certain Liberalised Remittance Scheme (LRS) transactions.<\/p>\n
But for the sale of an overseas tour programme package, the Finance Bill 2026 removes the threshold for the higher rate and applies 2% irrespective of the amount.<\/p>\n
Therefore:<\/p>\n
Do not confuse the TCS threshold for LRS remittances with the TCS rule for overseas tour packages.<\/p>\n
15. Overseas Tour Package vs LRS Remittance<\/p>\n
These are two different transactions.<\/p>\n
Overseas Tour Package<\/p>\n
Seller:<\/p>\n
Tour operator<\/p>\n
TCS:<\/p>\n
2% for FY 2026-27<\/p>\n
LRS Remittance<\/p>\n
Responsible person:<\/p>\n
Authorised dealer\/bank<\/p>\n
TCS treatment:<\/p>\n
Depends on the purpose and applicable threshold\/rate.<\/p>\n
Therefore, simply saying:<\/p>\n
“Foreign travel = 2% TCS”<\/p>\n
would be an oversimplification.<\/p>\n
The underlying transaction must first be identified.<\/p>\n
16. Who Has to Collect TCS?<\/p>\n
For an overseas tour programme package, the seller of the package is responsible for collection.<\/p>\n
This means a tour operator selling qualifying packages needs to configure its accounting\/invoicing system correctly.<\/p>\n
The seller should have controls for:<\/p>\n
Customer PAN;
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Package value;
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TCS rate;
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TCS amount;
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Date of receipt;
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Invoice;
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TCS ledger;
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Deposit;
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TCS return;
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Customer reconciliation.
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17. When Is TCS Collected?<\/p>\n
The general TCS timing principle is based on the earlier of:<\/p>\n
Debiting the amount payable by the buyer, or
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Receipt of the amount from the buyer.<\/p>\n
The Finance Bill’s amendment to the TCS framework continues this basic timing mechanism.<\/p>\n
Therefore, businesses should not wait until the customer completes the entire tour before considering TCS compliance.<\/p>\n
18. Advance Payment<\/p>\n
Suppose a customer books a foreign tour package for:<\/p>\n
\u20b912 lakh<\/p>\n
and pays:<\/p>\n
\u20b93 lakh advance.<\/p>\n
The seller should examine the TCS requirement at the time the relevant amount is received\/debited under the applicable provision.<\/p>\n
A proper accounting system should therefore calculate TCS even where the customer makes payment in instalments.<\/p>\n
19. Instalment Example<\/p>\n
Package value:<\/p>\n
\u20b920,00,000<\/p>\n
Customer pays:<\/p>\n
\u20b95 lakh booking advance;
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\u20b95 lakh second instalment;
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\u20b910 lakh final payment.<\/p>\n
At 2%, the total TCS on the eligible package value would be:<\/p>\n
\u20b920,00,000 \u00d7 2%<\/p>\n
= \u20b940,000<\/p>\n
The exact collection mechanics should be configured according to the applicable timing rule and actual invoice\/payment structure.<\/p>\n
20. Is TCS an Expense for the Customer?<\/p>\n
Normally, TCS collected from the customer is not intended to become a final expense merely because it is collected upfront.<\/p>\n
It is generally reflected as tax credit in the customer’s tax records.<\/p>\n
The customer can generally claim the available TCS credit against their tax liability, subject to the applicable return and credit rules.<\/p>\n
Therefore, travellers should not confuse:<\/p>\n
Tour cost<\/p>\n
with<\/p>\n
TCS collected.
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21. TCS Credit<\/p>\n
Suppose:<\/p>\n
Tour package:<\/p>\n
\u20b98,00,000<\/p>\n
TCS @ 2%:<\/p>\n
\u20b916,000<\/p>\n
The customer should ensure that the TCS is correctly reported against the customer’s PAN.<\/p>\n
The customer can then verify the tax credit through the applicable tax information statement\/annual tax statement and claim the eligible credit in the income-tax return.<\/p>\n
22. Why PAN Is Important<\/p>\n
The tour operator should obtain and correctly record the buyer’s PAN or other prescribed identification details, as applicable.<\/p>\n
Incorrect PAN reporting can cause:<\/p>\n
TCS not appearing correctly;
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Credit mismatch;
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Customer complaints;
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Rectification work;
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Refund\/credit issues.<\/p>\n
Therefore, PAN verification should be part of the booking process.<\/p>\n
23. Accounting Treatment for Tour Operator<\/p>\n
A tour operator should ideally maintain separate ledgers such as:<\/p>\n
Tour Package Sales<\/p>\n
\u20b9XX<\/p>\n
TCS Payable<\/p>\n
\u20b9XX<\/p>\n
Customer Receivable<\/p>\n
\u20b9XX<\/p>\n
The TCS collected should not be treated as normal business income.<\/p>\n
It represents an amount collected on behalf of the Government.<\/p>\n
24. Practical Accounting Example<\/p>\n
Suppose:<\/p>\n
Tour package:<\/p>\n
\u20b910,00,000<\/p>\n
TCS:<\/p>\n
\u20b920,000<\/p>\n
Customer invoice\/collection:<\/p>\n
\u20b910,20,000<\/p>\n
The accounting system should separately identify:<\/p>\n
Revenue = \u20b910,00,000<\/p>\n
TCS payable = \u20b920,000<\/p>\n
rather than incorrectly treating \u20b910,20,000 as pure tour revenue.<\/p>\n
25. GST and TCS Are Different<\/p>\n
This is another important practical point.<\/p>\n
GST<\/p>\n
is an indirect tax on supply of goods\/services.<\/p>\n
TCS<\/p>\n
is tax collected at source under income-tax law.<\/p>\n
Therefore:<\/p>\n
GST and TCS should not be mixed up.<\/p>\n
A tour operator may have both GST obligations and TCS obligations depending on the transaction.<\/p>\n
The GST taxability of the tour service should be separately examined.<\/p>\n
26. Is TCS Calculated on GST-Inclusive Amount?<\/p>\n
This requires careful examination based on the applicable TCS provision and nature of consideration.<\/p>\n
The seller should not blindly apply the rate to whichever figure appears as the “total invoice value”.<\/p>\n
A proper tax working should identify the amount on which TCS is required under the applicable law.<\/p>\n
This is particularly important where the invoice includes:<\/p>\n
GST;
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Service charges;
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Foreign currency components;
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Airline charges;
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Hotel charges;
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Commission;
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Other recoveries.
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27. Foreign Currency Packages<\/p>\n
Many overseas tour packages are quoted in:<\/p>\n
USD;
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EUR;
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GBP;
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AED;
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SGD;
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AUD.<\/p>\n
The tour operator should ensure that the taxable consideration for TCS purposes is appropriately converted and recorded in Indian rupees in accordance with the applicable rules.<\/p>\n
The accounting system should maintain:<\/p>\n
Foreign currency amount;
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Exchange rate;
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INR equivalent;
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TCS;
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Invoice value.
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28. Group Tours<\/p>\n
Suppose 20 people purchase a group tour.<\/p>\n
The operator should determine:<\/p>\n
Who is the buyer;
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Who is making the payment;
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Whose PAN is being reported;
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Whether the invoice is issued individually or collectively;
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How TCS credit should be allocated.<\/p>\n
This is particularly important because TCS credit ultimately needs to reach the correct taxpayer.<\/p>\n
29. Family Tour<\/p>\n
Suppose a husband purchases a family package for:<\/p>\n
Himself;
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Wife;
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Two children.<\/p>\n
The operator should properly identify the buyer\/payment party and maintain appropriate customer records.<\/p>\n
The fact that multiple family members travel does not automatically mean that the package value should be split among all travellers for TCS purposes.<\/p>\n
The transaction structure and buyer should be examined.<\/p>\n
30. Corporate Travel<\/p>\n
Businesses may also purchase overseas tour packages for:<\/p>\n
Employees;
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Directors;
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Business meetings;
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Incentive tours;
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Conferences;
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Corporate events.<\/p>\n
The company should maintain:<\/p>\n
PAN;
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Invoice;
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Payment details;
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Travel purpose;
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TCS details.<\/p>\n
The tax treatment can differ depending on the exact nature of the transaction.<\/p>\n
31. What If a Customer Cancels the Tour?<\/p>\n
Cancellation cases can create practical TCS issues.<\/p>\n
The operator should maintain:<\/p>\n
Original invoice;
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TCS collected;
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Cancellation note;
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Refund amount;
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Adjustment;
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Relevant TCS reporting.<\/p>\n
Where TCS has already been collected and subsequently refunded\/adjusted, the operator should ensure that the accounting and TCS reporting consequences are correctly handled.<\/p>\n
32. Refund of TCS<\/p>\n
TCS collected is generally reflected as tax credit for the customer.<\/p>\n
Therefore, where a transaction is cancelled or reversed, the operator should not simply delete the TCS ledger entry without considering:<\/p>\n
Whether TCS was already deposited;
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Whether TCS statement was filed;
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Whether correction is required;
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Whether customer credit was reported.<\/p>\n
Proper reconciliation is essential.<\/p>\n
33. Compliance for Tour Operators<\/p>\n
A professional compliance checklist should include:<\/p>\n
Customer onboarding<\/p>\n
\u2610 PAN captured
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\u2610 Name verified
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\u2610 Contact details recorded<\/p>\n
Invoice<\/p>\n
\u2610 Package identified
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\u2610 Taxable consideration identified
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\u2610 TCS rate applied correctly
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\u2610 TCS separately disclosed<\/p>\n
Accounting<\/p>\n
\u2610 TCS payable ledger maintained
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\u2610 Customer ledger reconciled
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\u2610 TCS deposit reconciled<\/p>\n
Return<\/p>\n
\u2610 TCS statement prepared
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\u2610 PAN details checked
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\u2610 Challan reconciled
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\u2610 Customer credit verified<\/p>\n
34. Common Mistakes Under FY 2026-27
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Mistake 1 \u2014 Applying 5% up to \u20b910 lakh<\/p>\n
Wrong for FY 2026-27.<\/p>\n
The rate is now 2%.<\/p>\n
Mistake 2 \u2014 Applying 20% above \u20b910 lakh<\/p>\n
Wrong for overseas tour packages in FY 2026-27.<\/p>\n
The 20% higher-rate mechanism has been removed for this category.<\/p>\n
Mistake 3 \u2014 Thinking \u20b910 lakh means “No TCS Below \u20b910 lakh”<\/p>\n
This was never the correct interpretation of the overseas tour package rule.<\/p>\n
Under the earlier regime, 5% applied to the package amount up to the threshold.<\/p>\n
For FY 2026-27, TCS is 2% irrespective of amount.<\/p>\n
Mistake 4 \u2014 Confusing LRS with Tour Packages<\/p>\n
Bank remittance under LRS and purchase of an overseas tour package are separate categories.<\/p>\n
Mistake 5 \u2014 Ignoring Transaction Date<\/p>\n
A package booked around the year-end should be examined carefully.<\/p>\n
The applicable rate depends on the relevant date and the law applicable to the transaction.<\/p>\n
Mistake 6 \u2014 Using Old Software Configuration<\/p>\n
Tour operators should update accounting\/ERP systems for FY 2026-27.<\/p>\n
Old configurations may still contain:<\/p>\n
5% \/ 20%<\/p>\n
and could automatically calculate incorrect TCS.<\/p>\n
35. Year-End Transition: March 2026 vs April 2026<\/p>\n
This is particularly important for tour operators.<\/p>\n
Transaction before 1 April 2026<\/p>\n
The earlier FY 2025-26 provisions may apply.<\/p>\n
Transaction from 1 April 2026<\/p>\n
The FY 2026-27 framework applies.<\/p>\n
The Finance Bill 2026 expressly states that the revised overseas tour package TCS treatment takes effect from 1 April 2026.<\/p>\n
Therefore, businesses should identify transactions around:<\/p>\n
31 March 2026 \/ 1 April 2026<\/p>\n
carefully.<\/p>\n
36. Practical FY 2026-27 Examples
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Package Value\tTCS @ 2%
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\u20b91,00,000\t\u20b92,000
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\u20b92,50,000\t\u20b95,000
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\u20b95,00,000\t\u20b910,000
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\u20b97,50,000\t\u20b915,000
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\u20b910,00,000\t\u20b920,000
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\u20b915,00,000\t\u20b930,000
\n
\u20b925,00,000\t\u20b950,000
\n
\u20b950,00,000\t\u20b91,00,000<\/p>\n
The calculation is simply:<\/p>\n
Eligible package amount \u00d7 2%
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37. Old vs New Example \u2014 \u20b915 Lakh Package<\/p>\n
This example clearly demonstrates why the change matters.<\/p>\n
Earlier framework<\/p>\n
\u20b910 lakh \u00d7 5% = \u20b950,000<\/p>\n
\u20b95 lakh \u00d7 20% = \u20b91,00,000<\/p>\n
Total TCS:<\/p>\n
\u20b91,50,000<\/p>\n
FY 2026-27<\/p>\n
\u20b915 lakh \u00d7 2%<\/p>\n
= \u20b930,000<\/p>\n
Difference<\/p>\n
\u20b91,50,000 \u2212 \u20b930,000<\/p>\n
= \u20b91,20,000<\/p>\n
Thus, the FY 2026-27 amendment significantly reduces the upfront TCS collection on higher-value overseas tour packages.<\/p>\n
38. Old vs New Example \u2014 \u20b925 Lakh Package
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Earlier framework<\/p>\n
\u20b910 lakh \u00d7 5%<\/p>\n
= \u20b950,000<\/p>\n
\u20b915 lakh \u00d7 20%<\/p>\n
= \u20b93,00,000<\/p>\n
Total:<\/p>\n
\u20b93,50,000<\/p>\n
FY 2026-27<\/p>\n
\u20b925 lakh \u00d7 2%<\/p>\n
= \u20b950,000<\/p>\n
This demonstrates the substantial impact of the amendment for premium\/high-value international tour packages.<\/p>\n
39. Impact on Tour Operators<\/p>\n
The new rate can simplify compliance significantly.<\/p>\n
Earlier<\/p>\n
The operator needed to:<\/p>\n
Track \u20b910 lakh threshold;
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Calculate 5% portion;
\n
Calculate 20% portion;
\n
Monitor cumulative amounts;
\n
Reconcile customer purchases.
\n
FY 2026-27<\/p>\n
The basic calculation becomes:<\/p>\n
Eligible package value \u00d7 2%<\/p>\n
This makes billing and accounting substantially simpler.<\/p>\n
40. Impact on Customers<\/p>\n
For travellers, the amendment generally means:<\/p>\n
Lower TCS on high-value tour packages;
\n
Simpler calculation;
\n
No 20% slab above \u20b910 lakh;
\n
Easier invoice verification;
\n
Lower upfront cash blockage.<\/p>\n
However, customers should remember:<\/p>\n
TCS is tax credit, not a discount on the tour package.<\/p>\n
41. Is 2% TCS a Final Tax?<\/p>\n
No.<\/p>\n
TCS is generally a collection mechanism.<\/p>\n
The amount collected is generally available as tax credit to the person from whom it has been collected, subject to the applicable rules and correct reporting.<\/p>\n
Therefore, if:<\/p>\n
Income-tax liability = \u20b92,00,000<\/p>\n
TCS credit = \u20b930,000<\/p>\n
then the eligible TCS credit can generally be adjusted against the final tax liability.<\/p>\n
42. What Should Customers Check?<\/p>\n
After purchasing an overseas tour package, customers should retain:<\/p>\n
Invoice;
\n
Payment receipt;
\n
TCS amount;
\n
PAN details;
\n
TCS certificate, where applicable;
\n
Relevant tax statement.<\/p>\n
At return-filing time, the customer should reconcile the TCS credit with the information available in the income-tax system.<\/p>\n
43. What Should Tour Operators Do Before FY 2026-27 Filing?<\/p>\n
Tour operators should update:<\/p>\n
Accounting software<\/p>\n
Change:<\/p>\n
5% \/ 20%<\/p>\n
to:<\/p>\n
2%<\/p>\n
for FY 2026-27 eligible overseas tour programme packages.<\/p>\n
Invoice templates<\/p>\n
Update the TCS description.<\/p>\n
ERP<\/p>\n
Update tax codes.<\/p>\n
Customer communication<\/p>\n
Explain the revised rate.<\/p>\n
TCS return setup<\/p>\n
Ensure the correct transaction\/category codes and statutory references are used.<\/p>\n
44. Quick FAQ
\n
Q1. Is TCS on overseas tour packages 5% in FY 2026-27?<\/p>\n
No.<\/p>\n
From 1 April 2026, the applicable rate is 2%.<\/p>\n
Q2. Is 20% TCS applicable above \u20b910 lakh?<\/p>\n
No, not for overseas tour programme packages under the FY 2026-27 revised framework.<\/p>\n
The higher-rate threshold has been removed.<\/p>\n
Q3. Is there any minimum threshold for overseas tour package TCS?<\/p>\n
For FY 2026-27, the package TCS is 2% irrespective of the amount under the revised provision.<\/p>\n
Q4. Who collects the TCS?<\/p>\n
The seller of the overseas tour programme package.<\/p>\n
Q5. Is TCS applicable to every foreign travel expense?<\/p>\n
No. The nature of the transaction must first be examined.<\/p>\n
Q6. Is LRS TCS the same as tour package TCS?<\/p>\n
No. They are separate categories.<\/p>\n
Q7. Can the customer claim TCS credit?<\/p>\n
Generally, yes, subject to correct reporting and applicable tax-credit rules.<\/p>\n
Q8. When did the new 2% rate become effective?<\/p>\n
1 April 2026.<\/p>\n
45. Final Compliance Checklist for FY 2026-27
\n
For Tour Operators<\/p>\n
\u2611 Identify whether the transaction is an overseas tour programme package
\n
\u2611 Capture customer PAN\/details correctly
\n
\u2611 Apply 2% TCS for FY 2026-27 eligible packages
\n
\u2611 Do not apply the old 5%\/20% structure
\n
\u2611 Update accounting software
\n
\u2611 Update invoice formats
\n
\u2611 Maintain TCS payable ledger
\n
\u2611 Deposit TCS within the prescribed timeline
\n
\u2611 File the applicable TCS statement
\n
\u2611 Reconcile TCS with customer records
\n
\u2611 Issue\/enable appropriate TCS reporting\/certificate<\/p>\n
For Customers<\/p>\n
\u2611 Check invoice
\n
\u2611 Check PAN
\n
\u2611 Check TCS amount
\n
\u2611 Preserve payment proof
\n
\u2611 Verify TCS credit in tax records
\n
\u2611 Claim eligible credit while filing ITR<\/p>\n