Introduction to TCS (Tax Collected at Source)

Tax Collected at Source (TCS) is a provision under the Income Tax Act where the seller of specified goods or provider of specified services collects tax from the buyer at the time of sale/rendering of services. The tax collected is remitted to the government.

Understanding Overseas Travel Packages

It mandated that the seller of overseas packages shall collect TCS at 5% of the sale value without any threshold limit. This was applicable from 1st October 2020.

Since your company as a Partner Agent is Selling overseas tour package to PAN holder and Invoicing The Traveler, you need to collect the TCS and file it to Income tax department.

As a DMC, our responsibility is to ensure that TCS norms are followed , because we are sending funds overseas on your customer’s behalf, so we require a declaration from your side.

Changes in TCS

From 1st April 2025, the Govt changed the threshold limit of ₹10 lakhs in this change for another slab of TCS rate of 20%

1. Applicable TCS Rates

A flat 5% TCS was applied on overseas packages irrespective of booking amount. Now, bookings above ₹10 lakhs invite a higher 20% TCS.

2. All Modes of Payment Covered

The expanded TCS applies irrespective of payment method – credit card, forex card, cash, cheque, bank transfer, etc.

3. Aggregation of Spends

The ₹10 lakh limit applies to aggregating spending by a buyer across multiple overseas bookings in one financial year. So if someone books packages worth ₹7 lakhs in May and ₹4 lakhs in October through two agents, the second booking crosses the threshold and faces 20% TCS.