A new sub section 1G has been introduced in section 206C to apply Tax Collection at Source (TCS) on sale of overseas tour package. Section 206C requires from all the sellers of tour package to collect tax from the buyer of the tour package over and above the cost of its tour package and will deposit it to the Government Treasury on the monthly basis. Seller would then be required to file a qufarterly TCS return separately. Buyers will get the credit of TCS in their income tax return.
Here are some of the common frequently asked question on the applicability of TCS on this issue.
- Whether any threshold limit is there for TCS?
No, there is no threshold limit of charging TCS on tour packages. Even a sale of Rs. 100/- will attract Tax collection. - Whether Individual/ HUF who have newly started their business will also be required to do TCS?
Yes, even if any Individual or HUF have started the business recently, TCS would be applicable from the day one. - Whether the overseas package will include the travel by road also like travel package for Bhutan and Nepal?
Yes, any tour outside Indian Territory would be subject to TCS - Whether the TCS will be applicable if air travel agent simply sells the air ticket and not complete package?
No. Simple sale of air tickets will not attract TCS unless or until it is a complete package itself. - If the person has bought overseas a tour package now but will be travelling after 01.04.2020. Whether TCS will be applicable?
No. All purchase and payment done prior to 1st April 2020 will be outside to the preview of TCS applicability. - What if the tour package will be cancelled subsequently?
There is no provision as such for the refund of the amount of TCS to the buyer by the booking agent. The buyer would be required to claim it back in their income tax return at the time of filing their income tax return. - There are 4 persons in my family who are going for travelling. Whether TCS would be required to be done by the all 4 persons or just simply from one person who is making the payment?
TCS is applicable on the “Buyer”. Whosoever purchases it will be subject to TCS. If only one person’s makes the payment, he may be treated as “one” buyer and would be subject to TCS alone. However, if the 4 persons want to do their payment separately or want their tour package bill separately, TCS could be done from all 4 persons. - What if the buyer doesn’t have taxable income and he want to furnish 15G/15H or a declaration that he don’t have any income.
There is no exception from TCS under such case and it is not dependant on the income of the buyer. TCS would be applicable on all such cases. There is no declaration form like Form No. 15G/15H in such cases. - If the buyer is minor (like in case of overseas tour package arranged by school in direct arrangement with tour operator) does TCS applicable on him?
Yes, TCS will be applicable in case of minor also and the PAN of the parents will be required in view of the earlier CBDT circular. - What is a student is going for its education in abroad?
If the student is buying a Tour package then the TCS would be applicable. Buyer of simply air tickets is not subject to TCS. - What if Honeymoon tour package of a couple is sponsored by the Parents of the couple?
The buyer of tour package in such case is the parents and not couple. TCS will be required to be done from the person to whom the billing is done who need not be a traveller. The present interpretation of section 206C (1G) requires the TCS from buyer who is the person to whom the billing is done and from whom the payment is collected.
