From April 1, 2020, every foreign traveller will have to pay 5% (PAN holder) and 10% (non-PAN holder) TCS (Tax Collection at Source) on total amount of tour package. By paying TCS, every person will come on the radar of the income tax department, which will be able to ascertain his or her income through their income tax returns (ITR). At present, there is a provision in ITR to mention the passport number in prescribed column. But not many taxpayers take it seriously. Even the tax consultants also don't press their clients to fill the passport number if they visit abroad in the financial year.
A large number of people go abroad on a leisure trip several times a year. At least 80% of taxpayers will move to a new scheme, says Finance Ministry Obviously, they use black money while paying tour package bill. In other cases, high ranking government and private sector officials make foreign tours with family for which other people or people make payment. This is because the latter seek undue favours from officials. And to oblige them, they finance overseas trips of officials, which is a bribe of sorts. For the first time, such people will come under scrutiny.
In 2020-2021 union budget, Sitharaman has made provision to impose TCS on every foreign tour package bill amount. It means every foreign visitor whether he is an income taxpayer or not has to pay tax. However, there is a provision that if a person whose annual income is under threshold limit (under Rs 5 lakh) visits a foreign country, then he will be eligible for TCS refund. Analysing the provision, tax consultants say income tax department will be able to cross-check the standard of living of an Indian who travels abroad through his ITR, which will reveal the actual income and his extravagance. It will stop black money on overseas travel Now, foreign travellers will have to pay 5% TCS on total travel package bill.
This measure will bring those people on income tax department radar who frequently travel abroad and hide it in their ITR. Through data analytics, the department will be able to assess the actual income of foreign traveller. This is a challenging provision for government employees and their family members, doctors etc who visit abroad on sponsorship. Pointers to keep in Mind Every foreign traveller has to pay 5% and 10% tax collection at sources (TCS) on the total amount of tour package The practice of booking tour package by the person who wishes to oblige influential people will stop.
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