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A frequently asked question ‘foreign tour package’ includes travel expenses, hotels, boarding and lodging and ‘expenses of a similar nature’, but does not cover only the purchase of international tickets or only hotel accommodation. The Finance Ministry issued the FAQ two days after postponing the implementation of the increased TCS and making some significant changes in the face of criticism from many quarters.
While creating a system for real-time update of remittances under LRS, the government has also said that the details of previous remittances during the financial period can be taken by the authorized dealer when he transacts. “If an authorized dealer properly collects TCS on the information given under LRS, he will not be treated as a default assessee,” the government said.
Understand TCS rules…
Clarifying on different TCS for the first and second half of the current financial year, the ministry said the limit of Rs 7 lakh will be applicable for the entire 2023-24. So, if the threshold ends before October 1, all the money thereafter will attract TCS. Besides, the government has also said that TCS will be payable on purchase of foreign tour packages classified under LRS and will not attract remittance provisions.
Meanwhile, the FAQ is still unclear on various issues raised by banks as their systems are not ready to deal with the proposed tax changes. In the last budget, Finance Minister Nirmala Sitharaman had announced an increase in TCS for many overseas expenses.
