‘It is a burden, avoidable’: Ex-SBI chief Rajnish Kumar on credit card TCS for overseas travel

As of October 1, the Government of India has implemented a 20% Tax Collected at Source (TCS) on all foreign tour packages. This measure, having been in place for two months now, is expected to change the dynamics of international tourism in the country. Rajnish Kumar, Chairman of Mastercard India, was speaking during a discussion with Karishma Asoodani of Business Today TV.

Kumar said, “If you’re asking my honest opinion, this is something that, in my view, is avoidable. But I’m sure that the Expenditure Department would have their reasons for imposing this. But as a traveller, if you ask me, it is a burden.”

The tax represents a significant shift in the government’s approach to handling the tourism industry, leaning towards greater regulation. This development is worth noting for travellers and businesses in the tourism sector.

Basically, TCS isn’t an extra tax burden. You have the option to offset it against your total income tax or claim it as a refund when filing your income tax returns (ITR). However, it’s important to note that the funds get tied up until you receive the refund, which typically takes 8-10 months.

TCS refers to the levy gathered by the seller from the buyer during a sale, intended for depositing with the tax authorities. Section 206C of the Income-tax Act dictates the goods subject to this tax collection responsibility for the seller. Individuals engaged in this process need a Tax Collection Account Number (TCAN) to facilitate the collection of TCS.

If one misses the deadline for filing the TCS return as per the income tax regulations, they’re liable to pay a fee of Rs 200 for each day of delay, capped at the total TCS amount. It’s important to settle this late filing fee prior to submitting the TCS return. Note that this fee of Rs 200 per day is categorised as a late filing charge rather than a penalty.

Also read: Unchanged Repo Rate: Here’s how RBI’s move will impact home loan borrowers’ EMI repayment strategies and FD investments

Also read: Gold and silver prices today: Yellow metal stable in a volatile market; silver bows to dollar pressure

Also read: RBI to introduce regulatory framework for lending business, promises fair practices and data privacy

Additionally, under Section 271H, a penalty might be imposed if the tax collector submits an incorrect TCS return. This penalty ranges from a minimum of Rs 10,000 to a maximum of Rs 1 lakh, depending on the severity of the incorrect filing.

Hence, imposing a 20% TCS on foreign tour packages can indeed be perceived as a financial burden for those purchasing these packages. It effectively increases the initial cost by 20%, impacting the overall affordability for travellers. This might dissuade some potential travellers or influence their decision-making regarding such expenses.

Also Read: How to withdraw PF? Follow these 10 steps to get EPF money online: Money Today