You’ve picked your dream destination, scrolled through flight deals, and found a tempting tour package – but before you lock it in, there’s one number that can quietly inflate your travel bill: TCS, or Tax Collected at Source. It’s not a new rule, but in 2025, it’s one you can’t afford to ignore.
Let’s break down how it works, why it matters, and how you can plan smarter so that more of your travel budget stays with you.
What is TCS on Foreign Tour Packages?
TCS (Tax Collected at Source) is a tax collected by sellers (like tour operators) when you purchase certain services. For foreign travel, it applies when you book a complete overseas tour package through a registered provider in India.
Here’s a quick look at how the new slab works for 2025, if your total annual spending on foreign tour packages exceeds ₹10 lakh, a steep 20% TCS is applicable. Transactions up to this threshold are taxed at a 5% rate.
This tax change, brought under the Liberalized Remittance Scheme (LRS), is part of the Indian government’s effort to increase transparency and compliance around high-value international transactions.
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Updated TCS on Foreign Tour Packages in 2025
| Type of Foreign Remittance | Threshold Limit | TCS Rate |
| Overseas tour packages | Up to ₹10 lakh | 5% |
| Overseas tour packages | Above ₹10 lakh | 20% |
| Travel (without package) | Up to ₹10 lakh | None |
| Travel (without package) | Above ₹10 lakh | 20% |
Essentially, TCS targets full-service international packages purchased through Indian tour operators; individual flight or hotel bookings are exempt.
Explore TCS exemptions on international money transfers
Why Was TCS on Foreign Tour Packages Increased?
So why did the government decide to tighten the rules? The answer lies in transparency. By tracking high-value foreign spending, the Income Tax Department can ensure that international expenses align with declared income, a step toward broader tax compliance.
Think of it less as an extra burden and more as the government’s way of keeping large remittances visible.
- Widening the tax net
- Monitoring high-value overseas expenses
- Improving compliance under LRS
While the intent is regulatory, the immediate effect on travellers is clear: higher upfront costs that can dent cash flow.
How to Calculate TCS on Foreign Tour Packages?
Let’s see how this plays out in real life. Suppose you book a ₹12 lakh European family package
- First ₹10 lakh is taxed at 5% = ₹50,000
- Remaining ₹2 lakh is taxed at 20% = ₹40,000
- Total TCS = ₹90,000
That’s ₹90,000 out of pocket before your trip even begins a good reason to plan your payments strategically.
Does TCS Mean Additional Tax Burden?
The good news: TCS isn’t an extra tax that disappears into thin air.
It’s simply an advance that you can reclaim when you file your income tax return.
- Adjust it against your income tax liability
- Claim a refund while filing returns
The key takeaway is your cash flow gets hit temporarily, but you recover the money later.
Before we dive into how you can reduce your TCS burden, let’s take a look at how different types of travelers are impacted under the new rules in 2025.
Tips to Reduce TCS Impact While Travelling Abroad
The rules may be strict, but smart planning still gives you room to breathe. Here’s how frequent travellers are managing their TCS exposure:
- Stay Within Threshold: Try to keep your travel costs under ₹10 lakh annually to be eligible for the lower 5% rate.
- Split Bookings: Book flights, hotels, and activities separately instead of choosing a bundled package.
- Use Education/Medical Purpose if Legitimate: If your travel is for education or health purposes, lower TCS rates (0.5%-5%) apply.
- Spread Across Family Members: Distribute expenses among family members if traveling together. Each individual has a ₹10 lakh limit.
- Check if You Can Claim as Business Expense: Entrepreneurs or freelancers can evaluate if travel qualifies as a deductible expense.
None of these tactics are loopholes; they’re simply smarter ways to plan travel within the law.
Discover the best ways to send money abroad from India in 2025
Who Collects TCS on Tour Packages?
The travel agency, tour operator, or platform that sells you the package is responsible for collecting TCS. They deduct it at the time of booking and deposit it with the government under your PAN number.
You can view the collected amount in your Form 26AS or AIS (Annual Information Statement) on the Income Tax portal.
Tip: Always cross-check your PAN on the invoice; that ensures the deduction is reflected properly in your Form 26AS.
How TCS on Foreign Tour Packages Compares with Other Remittances
Not all remittances are treated the same. The government differentiates between luxury spending and essential payments abroad.
- TCS on foreign education via loan: 0.5%
- TCS on medical treatment abroad: 5%
- TCS on foreign investment: 20%
- TCS on international gift transfers: 20%
Clearly, leisure travel attracts one of the highest rates, reinforcing the message that high-end discretionary spends are under closer watch.
Find out how to legally avoid paying 20% TCS on foreign remittances
What if You Cancel Your Tour?
Travel plans change and so do bookings. If you cancel your trip, your TCS amount doesn’t vanish. You should receive a TCS certificate (Form 27D) and ensure it’s reflected in your Form 26AS.
In short, as long as your PAN and refund entries are correctly reflected, getting your TCS back is routine.
TCS Refund Process
Here’s how travellers are typically claiming their TCS refunds without hiccups:
- File your ITR (Income Tax Return)
- Declare the TCS amount paid under “TDS/TCS Details”
- Adjust it against your tax liability or claim a refund
Always verify that your tour operator has deposited the tax under your PAN before filing it; this prevents refund delays.
Learn how to claim a refund on TCS for international remittances
Why Use HOP Remit by moneyHOP for Your International Transfers?
Managing travel payments isn’t just about the package you book; it’s about how you move your money internationally.
If you’re planning to travel abroad, managing payments smartly is just as important as booking the right itinerary. HOP Remit by moneyHOP is an all-digital remittance platform designed specifically for individuals who want a faster, more transparent, and cost-effective way to send money overseas.
With HOP Remit, you can:
- Track all charges transparently—no hidden fees
- Get the best exchange rates with near-zero markups
- Transfer funds for travel, education, or family maintenance purposes
- Upload all documents digitally for TCS compliance and record-keeping
- Enjoy 24/7 human assistance and regulatory compliance built-in
In a market crowded with remittance options, HOP Remit by moneyHOP stands out for combining regulatory compliance with consumer transparency.
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Final Thoughts
The 20% TCS rule may sound daunting, but it’s manageable with foresight. Travelling abroad in 2025 doesn’t have to mean locking away thousands in tax; it’s about understanding the system and working within it.
Plan early, distribute expenses smartly, and claim what’s rightfully yours.
And when it’s time to move your travel funds abroad, trust a platform like HOP Remit by moneyHOP, where every rupee is accounted for and every transfer is fully compliant.
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