TCS on Foreign Tour Package: 5% Up To Rs. 10 Lakhs, 20% Beyond
TL;DR
- An "overseas tour programme package" sold by an Indian operator attracts 5% TCS up to Rs. 10 lakhs and 20% on the amount above Rs. 10 lakhs in a financial year per traveller.
- The TCS is collected upfront by the tour operator and reflected in your Form 26AS and AIS.
- DIY trips (you book flights and hotels separately yourself) are not "tour packages" but they fall under LRS for foreign exchange purchase and have their own TCS treatment.
- The Rs. 7 lakhs threshold that applies to other LRS purposes does not apply here. Tour package TCS starts from the first rupee, just at 5%.
- TCS is recoverable as a tax credit in your ITR.
What this means in plain terms
When you book a foreign trip through MakeMyTrip, Thomas Cook, Yatra, TBO, or any registered Indian tour operator, the operator becomes the "seller" of an overseas tour programme package under Section 206C(1G). The law says: collect 5% from the buyer (you) at the time of receiving payment. If the package costs more than Rs. 10 lakhs, collect 20% on the excess.
The amount you pay extra in TCS is not a tax expense. It is your own tax money parked with the government, waiting for you to claim it back when you file your ITR. So a Rs. 5 lakhs package costs you Rs. 5.25 lakhs cash today, but you get the Rs. 25,000 back as a refund or adjustment when you file the return for that year.
What qualifies as a tour package
The CBDT definition
An "overseas tour programme package" means "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". The operator must be a person who arranges or facilitates the tour, including travel agents.
When the operator collects
The collection happens at the time of receipt of payment. If you pay in instalments, TCS applies on each instalment. The Rs. 10 lakhs threshold is cumulative across instalments within the same financial year for the same buyer.
Aggregation by traveller
If a family of four buys a single package for Rs. 12 lakhs, the operator typically treats it as a single buyer (whoever paid) and applies 20% TCS on the Rs. 2 lakhs above the threshold. Booking under separate buyers may help spread the TCS impact, but only if the payment instruments are also separate.
Tour package vs. LRS
Two different routes
A tour package booked from an Indian operator: the Indian operator handles the foreign exchange conversion and remittance. TCS is collected by the operator.
A DIY trip where you buy foreign currency or a forex card yourself: the bank or money changer collects TCS under LRS, with the Rs. 7 lakhs and Rs. 10 lakhs thresholds depending on purpose.
Mixed scenarios
If you book flights and accommodation via an Indian platform but pay in INR (the platform handles forex), it is typically treated as a tour package. If you pay the foreign hotel directly using your forex card, that is LRS for travel.
Hotel-only bookings
A pure hotel booking abroad without flights is generally not a "tour package" but a service purchase. Operators tend to be conservative and apply TCS anyway. Ask for clarity before paying.
TCS rates and thresholds for FY 2025-26
The 5% slab
Up to Rs. 10 lakhs of cumulative tour package payments in a financial year, the rate is 5%. There is no nil bracket for tour packages, unlike the Rs. 7 lakhs or Rs. 10 lakhs thresholds for other LRS purposes.
The 20% slab
Above Rs. 10 lakhs, 20% TCS applies to the excess. The 20% does not apply retrospectively to the first Rs. 10 lakhs.
Special situations
If the tour package includes a stop in India before going abroad, the entire package is still treated as overseas if the predominant purpose is foreign travel. If it is an India-only trip, no TCS under 206C(1G) applies.
Claiming TCS credit in your ITR
Form 27D from the operator
The tour operator issues Form 27D within 15 days of the end of the quarter. Check your email and the operator's account dashboard. Keep this safely; you may need it during scrutiny.
AIS reflection
The TCS deposit by the operator flows into your AIS via Form 27EQ filings. Compare what the operator collected versus what AIS shows. Mismatches happen; raise them with the operator's tax desk.
ITR adjustment
Enter the TCS in Schedule TCS of your ITR-1, 2, 3, or 4 (whichever applies). The portal auto-pulls from AIS; verify before submission. The TCS reduces your final tax payable or generates a refund.
A real example
Anjali, 36, Rs. 32L CTC, Mumbai, and her husband book a 12-day European honeymoon package from MakeMyTrip in October 2025 for Rs. 8.5 lakhs (covering flights, hotels, transfers, and sightseeing for two people).
Step 1: MakeMyTrip invoices Rs. 8,50,000. TCS at 5% on the full amount (since they are below Rs. 10 lakhs cumulative) = Rs. 42,500. Total paid: Rs. 8,92,500.
Step 2: In February 2026, Anjali and her parents book a Japan-Korea trip with the same operator costing Rs. 4 lakhs. Cumulative tour package buys now Rs. 12.5 lakhs. The first Rs. 1.5 lakhs of this booking takes the package across the Rs. 10 lakhs threshold.
Step 3: TCS on the Feb booking: 5% on Rs. 1.5 lakhs (within threshold) plus 20% on Rs. 2.5 lakhs (above) = Rs. 7,500 + Rs. 50,000 = Rs. 57,500. Total paid: Rs. 4,57,500.
Step 4: Total TCS for FY26: Rs. 42,500 + Rs. 57,500 = Rs. 1,00,000.
Step 5: While filing ITR-1 for AY 2026-27 in June 2026, Anjali has total tax liability after Section 80C and HRA of Rs. 3.6 lakhs. Her employer's TDS was Rs. 3.2 lakhs. TCS of Rs. 1 lakh covers the shortfall and generates a Rs. 60,000 refund.
What to do this week
- If you are booking a foreign trip costing more than Rs. 10 lakhs, ask the operator to split bookings across two financial years (e.g., partial advance in March, balance in April) only if itinerary timing permits.
- Always download Form 27D from the operator within 30 days of payment. Mismatches with AIS take time to resolve.
- Compare booking through an Indian operator vs. doing it yourself via an international booking platform with your forex card. The TCS treatment differs and so does the total cash outflow.
- Keep tour package invoices and payment receipts together with your tax file. They are evidence if AIS shows a different amount.
- Run the 6-step assessment at https://myfinancial.in to see your old-vs-new regime delta, unused deductions, and insurance gap in under 10 minutes.
FAQ
Is TCS on tour package applicable if I pay in EMI?
Yes. TCS is collected on each EMI proportionately. The operator calculates the total package value and collects TCS on each payment until the full TCS amount is collected.
What if the operator forgets to collect TCS?
The operator is liable. They will reach out to you for the differential or absorb it. In practice, large operators have automated TCS collection that rarely fails.
Can a corporate-sponsored employee trip avoid TCS?
If the employer books the tour and pays the operator, the employer is the buyer. TCS is then collected from the employer, and the employee is not directly impacted. Some companies pass the cost back to employees, which can become a perquisite.
Does Bhutan or Nepal travel count as a foreign tour for TCS?
Technically yes, since both are outside India. However, the practical TCS implementation depends on whether the operator structures it as a foreign currency settlement. Pure INR-settled packages may escape strict 206C(1G) interpretation; check with the operator.
Is the Rs. 10 lakhs threshold per operator or aggregate?
The buyer (you) gets one Rs. 10 lakhs threshold per financial year aggregated across all operators. But practically, each operator only sees their own bookings and may apply the threshold per their own ledger. Reconcile at ITR time.
Are airline tickets bought separately considered a tour package?
A standalone flight ticket is not a tour package. If you book just flights via an Indian travel platform, TCS may not apply. However, if flights are bundled with hotels or activities, it becomes a package.
Can senior citizens or students get a TCS exemption on tour packages?
There is no specific exemption for senior citizens or students under Section 206C(1G) for tour packages. However, an educational study tour conducted by a recognised institution may be treated differently depending on the operator's classification.
Sources
- Section 206C(1G), Income Tax Act: https://incometaxindia.gov.in/
- CBDT Circular on TCS on overseas tour packages: https://incometaxindia.gov.in/
- Finance Act 2023 and 2024 amendments: https://incometaxindia.gov.in/
- AIS and Form 26AS user manual: https://www.incometax.gov.in/
- RBI Master Direction on LRS: https://www.rbi.org.in/
This is general information, not personalised advice. For your situation, consult a Certified Financial Planner.
