Quick answer
From 1 April 2026, an Indian tour operator must collect 2% TCS on the full value of an overseas tour package, with no threshold. Forex for a trip you plan yourself attracts no TCS up to ₹10 lakh per person per financial year, and 20% above. TCS is advance income tax, not a fee: you claim it, or get it refunded, when you file your ITR.
Key takeaways
- Overseas tour packages attract 2% TCS on the full amount, from the first rupee, since 1 April 2026.
- Forex and other LRS spends for travel: nil up to ₹10 lakh per person per financial year, 20% above.
- TCS is credited against your income tax. File an ITR to adjust it or get it refunded.
- Book and pay in the name of the person who files a return, with an Aadhaar-linked PAN.
What changed on 1 April 2026?
The Union Budget 2026 cut and simplified the tax collected at source (TCS) on overseas tour packages. Until 31 March 2026, an Indian tour operator collected 5% on the first ₹10 lakh of packages you bought in a financial year and 20% on anything above that. From 1 April 2026, the rate is a flat 2% of whatever you pay, from the first rupee, with no threshold and no higher slab.
For most families this is a straight improvement in cash flow. A ₹5 lakh Europe package used to lock up ₹25,000 until your tax refund; it now locks up about ₹10,000. Large family trips and destination weddings abroad gain even more, because the old 20% slab has gone.
What did not change is the gap between packages and forex. Forex you buy for a trip you plan yourself still attracts no TCS until your total remittances cross ₹10 lakh in the year.
What are the current TCS rates on travel and other LRS spends?
| What you pay for | TCS at the time of review |
|---|---|
| Overseas tour package from an Indian operator | 2% of the full amount, no threshold |
| Forex notes, forex card loads and other LRS remittances | Nil up to ₹10 lakh a year, 20% above |
| Education or medical treatment abroad | Nil up to ₹10 lakh a year, 2% above |
| Domestic tour package | No TCS |
| Spends abroad on an Indian credit card | Not counted under LRS for TCS |
The ₹10 lakh threshold is per person per financial year (April to March), and it counts all your LRS remittances together: travel forex, gifts to children abroad, tuition and overseas investments. The 2% on packages sits outside that threshold and applies regardless of how much else you have sent abroad.
What counts as an overseas tour package?
The tax law treats any bundle that takes you outside India and includes travel, hotel stay, meals or similar expenses as a package. In practice that covers:
- Group tours and fixed departures to Europe, Southeast Asia, Dubai and elsewhere
- Customised family holidays with flights, hotels and transfers
- Land-only packages, where you buy the flights separately
- Cruise packages sold by an Indian company
A flight ticket on its own is not a package and carries no TCS. Some Indian booking sites also collect TCS on standalone overseas hotel bookings, treating them as packages, so check the checkout screen before you pay. Splitting a holiday into "flights" and "land" does not avoid TCS on the land part.
Worked examples in rupees
A family package to Switzerland
A Delhi family of four books a seven-night Switzerland holiday with flights at ₹1,90,000 per person.
| Line | Amount |
|---|---|
| Package price for 4 | ₹7,60,000 |
| GST at 5% | ₹38,000 |
| TCS at 2% on the GST-inclusive total | about ₹15,960 |
| Total paid | about ₹8,13,960 |
| TCS under the pre-April 2026 rules (5%) | about ₹39,900 |
The ₹15,960 is not a cost. It shows in the payer's tax records and is adjusted against income tax when they file. The Switzerland trip cost guide explains what drives the package price itself.
A couple planning Japan themselves
A Bengaluru couple books flights to Tokyo for ₹1,20,000, pays ₹1,50,000 for hotels on an international site with a credit card, and loads ₹80,000 each on forex cards.
- Flights: no TCS
- Hotels paid by credit card to a foreign site: outside LRS for TCS at the time of review
- Forex cards: each person is well under ₹10 lakh, so no TCS
Total TCS: nil.
A parent who crosses ₹10 lakh
A Pune mother has already sent ₹9 lakh for her son's tuition in the US this financial year, with no TCS because she was under the threshold. In December she buys ₹3 lakh of forex in her own name for a family visit. Her total is now ₹12 lakh, so ₹2 lakh is above the threshold and attracts 20%: ₹40,000.
Two cleaner options exist. Her husband, who has made no remittances this year, can buy the travel forex for his own trip in his own name, and TCS is nil. Or, if the family books the trip as a package, TCS is a flat 2%, about ₹6,000 on ₹3 lakh. For families who send a lot abroad, a package can now lock up less money than self-booked forex.
How do you claim TCS in your ITR?
- Give the right PAN. The credit goes to the person whose PAN is on the booking. Use a valid, Aadhaar-linked PAN belonging to someone who files a return.
- Get the TCS certificate. The operator deposits the tax, files a quarterly TCS return and then issues a certificate. Ask for it if it doesn't arrive.
- Check Form 26AS and the Annual Information Statement. On the Income Tax e-filing portal, the credit appears after the operator files its quarterly return, usually within one to two months of the quarter ending.
- File your return. TCS is usually pre-filled in the taxes-paid section. It is set against your tax for the year, and any excess is refunded to your bank account, with interest where due.
Salaried travellers don't have to wait for the refund. You can declare TCS to your employer, who can then deduct less TDS from your salary for the rest of the year.
Before paying a large deposit, ask the operator to show TCS as a separate line on the invoice, along with the PAN it will be reported against. Correcting a wrong PAN after the quarterly return is filed is slow.
What mistakes make TCS expensive?
- An inoperative PAN. If your PAN isn't linked to Aadhaar, TCS is collected at a higher rate, and the credit can be harder to claim.
- Booking in a non-filer's name. Retired parents with income below the taxable limit must still file an ITR to get TCS back. If a son or daughter is paying anyway, put the booking in their name.
- Forgetting the refund timeline. TCS paid in April 2026 comes back only after you file your return for 2026-27, typically in the second half of 2027. Budget for that money being away for a year or more.
- Confusing TCS with GST. GST on tour packages is a tax on the service and is not refundable to individuals. TCS is your own income tax, paid in advance.
Our foreign exchange desk can work out the TCS on your mix of package and forex before you pay, and the TCS glossary entry has a one-page summary.
Frequently asked questions
Is TCS on a foreign tour package an extra cost?
How much TCS will I pay on a ₹60,000 Dubai package?
Can I avoid TCS by paying for a tour package with a credit card?
Is TCS charged on domestic tour packages?
I don't file an income tax return. Can I still get TCS back?
Is TCS calculated before or after GST?
How we checked this page
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Written and fact-checked by the Elitech Travels editorial desk in New Delhi, drawing on our consultants' day-to-day booking work and the official sources below. Rules, fares and fees change — always confirm anything critical with the issuing authority before you travel. Our editorial policy.
