Dreaming of that perfect getaway overseas? Sending money for your travel expenses may seem straightforward, but did you know there could be taxes involved? Falling for shortcuts to send money tax-free can lead to costly mistakes or even illegal transfers. So, knowing the tax rules can save you from surprises.
So yes, sending money abroad from India for tourism involves two key taxes, which are TCS (Tax Collected at Source) and GST (Goods and Services Tax).
This simple guide explains the taxes on sending money abroad for international travel without any jargon and zero confusion. So that you are aware of the applicable TCS and GST and we can help your international money transfer be tax compliant.
Also Read: Is Purchase of Foreign Currency and Forex Cards Taxable in India?
TCS on Foreign Remittances for Tourism
What is TCS?
Under the Liberalised Remittance Scheme (LRS) by the Reserve Bank of India (RBI), Indian residents can send up to USD 250,000 abroad per financial year per person. However, depending on the transfer purpose and the government-set threshold, banks and remittance companies are required to collect TCS.
Who Pays TCS?
The person sending the money (the traveller or travel sponsor) is liable to pay the applicable TCS. The TCS is collected by the bank or authorised dealer during the transaction and submitted to the Income Tax Department.
TCS Rates Applicable for Tourism-Related Remittances
Tourism-related outward remittances below Rs. 10 lakhs are subject to a 5% TCS. For remittances exceeding Rs. 10 lakhs, a TCS of 20% applies to the full amount.
| Transfer Purpose | Rate of TCS for up to Rs. 10 Lakhs | Rate of TCS for Above Rs. 10 Lakhs |
| International tour packages and other tourism related payments | 5% of the total amount | 20% of the total amount |
Can TCS be Refunded?
Yes, irrespective of the remittance purpose, the TCS paid can be claimed back as a refund or adjustment in your ITR payable while filing your Income Tax Return at the end of a financial year.
TCS paid shall be deducted from your overall tax liability, so you only need to pay the remaining ITR payable amount.
However, if your ITR payable is less than the TCS amount paid, the balance amount after ITR will be refunded to you.
How to Claim TCS Refund on Foreign Remittance for Tourism?
To claim a TCS refund, one must file an Income Tax Return. After ensuring that your TCS information is accurately recorded in Form 26AS, you can proceed with your ITR filing. Your TCS paid shall be automatically added to your tax liability and computed accordingly.
Form 26AS, also known as the Tax Credit Statement, linked to your PAN Card, shows the TCS paid in a financial year and is automatically updated during tax deductions. It can be viewed or downloaded from the Income Tax website.
Step-by-step Guide: How To Claim TCS Refund Online When Filing ITR?
GST on Foreign Remittances for Tourism
GST on Transaction Fees
Banks and authorised forex dealers charge a service transaction fee for processing international transfers, including those for overseas travel. GST is charged at 18% on this service fee.
Let’s say:
Your bank charges ₹500 as a service fee for sending money abroad for a foreign hotel booking.
GST at 18% is levied on ₹500 = ₹90.
Total bank charge due to GST = ₹590.
GST on International Transfer Amount
The government imposes GST on the transfer amount, but it remains relatively low. The GST is calculated based on the transaction volume, which is divided into three slabs, and it applies the same for outward remittance for foreign travel.
| Slabs | GST Payable | Minimum Tax to be Paid | Maximum Tax to be Paid |
| Slab 1 (Up to Rs. 1 lakh) | 0.18% of the total amount sent abroad | Rs. 45 | Rs. 180 |
| Slab 2 (Rs. 1 lakh – Rs.10 lakhs) | Rs.180 + 0.09% of the amount above Rs. 1 lakh to Rs. 10 lakhs | Rs. 180 | Rs. 990 |
| Slab 3 (Above Rs. 10 lakhs) | Rs. 990 + 0.018% of the amount above Rs. 10 lakhs | Rs. 990 | Rs. 10,800 |
Can GST on International Money Transfer be Refunded?
No, unlike TCS, GST on the service fee and the transfer amount cannot be refunded.
Do NRIs Need to Pay Tax for Tourism-Related Overseas Money Transfer?
NRIs do not do overseas fund transfers through the LRS Scheme. Therefore, as per the Income Tax Act, their payments to NRE or foreign bank accounts are not subject to TCS. However, they must pay GST charges on currency service charges and transfer amount.
ICICI Lombard's travel insurance starting at just ₹22/day!
Book Now with ExTravelMoney
Tax Planning Tips for Overseas Travel Remittances
- Keep Track of Remittances
Monitor your total foreign remittances in a financial year to understand when TCS may apply. Staying informed helps avoid confusion and ensures correct TCS deduction.
- Maintain Proper Documentation
Preserve receipts of remittances and TCS certificates for smoother ITR filing and to support any refund claims or queries from the Income Tax Department.
- Choose Transparent Pocket-Friendly Service Providers
Opt for banks or forex dealers that clearly disclose their fees and applicable taxes. Since GST applies to their service charges, transparency helps avoid bill shock. Choose the one with low service fees to reduce the GST impact on the forex service charge.
- File Your ITR Timely
If TCS has been deducted on your remittances, you can claim it only if you file your income tax return accurately.
Taxes aren’t deal-breakers, but they do matter. So, understanding how TCS and GST apply to your international money transfer can help you avoid surprises and ensure compliance through smart planning and timely tax filing.
With the call guidance of forex experts at ExTravelMoney, get a clear awareness and financial insight, and ensure that your transfer for overseas tourism is both effective and tax-efficient.
FAQ
Ann Mariya Job is the Associate Content Writer at ExTravelMoney.com. Holding a Bachelor’s in Journalism, she excels in creating deeply researched, engaging, and crisp content. Her work helps readers understand the complexities of foreign exchange, overseas money transfers, and international travel.