Navigating the Recent Tax Changes on Foreign Tours: What Travelers Need to Know

Introduction:


Planning a foreign tour is exciting, but it’s crucial to stay informed about recent changes that could
impact your travel expenses. Starting from July 1, 2023, a Tax Collection at Source (TCS) of 5-20% will be
applicable on transactions made through forex credit and debit cards during foreign tours. However,
there are exceptions for health and education expenses as well as for individuals with annual spending
below ₹7 lakh. In this blog post, we’ll explore these tax changes and provide tips on how to navigate
them effectively.

Understanding the TCS Update:


The TCS is a tax collected at the source on transactions made through forex credit and debit cards during
foreign tours. The tax rate will vary between 5% and 20%, depending on the nature of the transaction.
This means that a percentage of your expenditures, such as gifts, products, stocks, and goods, will be
collected as tax at the time of the transaction.

Exceptions for Health and Education Expenses:


The TCS does not apply to health and education expenses incurred abroad using forex credit and debit
cards. This exception provides relief for travelers seeking medical treatments or pursuing educational
opportunities overseas.

Exceptions for Individuals with Annual Spending Below ₹7 Lakh:


In addition to health and education expenses, individuals with annual spending below ₹7 lahks will be
exempt from the TCS. If your total annual expenditure on foreign tours falls below this threshold, you
won’t be subjected to tax collection at source. This exemption benefits individuals with lower
spending, allowing them to enjoy their foreign tours without the additional tax burden.

Navigating the Changes:


To navigate these tax changes effectively, consider the following tips:

  1. Budget Wisely: Adjust your budget to account for the potential tax burden when estimating the
    the overall cost of your foreign tour.
  2. Seek Expert Advice: Consult with travel agents or financial advisors who can provide guidance on the
    tax implications and assist with effective budgeting and planning.
  3. Keep Accurate Records: Maintain detailed records of your transactions and expenses made through
    forex credit and debit cards to ensure compliance with tax regulations.
  4. Stay Updated: Stay informed about any further updates or changes in tax regulations that may impact
    your travel plans.

Conclusion:


Being aware of the upcoming TCS on transactions made through forex credit and debit cards during
foreign tours is crucial for travelers. By understanding the exceptions for health and education expenses
and the exemption for individuals with annual spending below ₹7 lakh, you can navigate these changes
and manage your travel expenses effectively. Remember to budget wisely, seek expert advice, maintain
accurate records, and stay updated with the latest tax regulations. With careful planning, you can enjoy
your foreign tour while minimizing the impact of the TCS on your finances.

Is forex card good for international travel?

You can read the new tax policies and decide if it is good for your travel or not.

How much does forex card charge per transaction?

It depends on the user to user and the country but it is typically 2-3 % of the transaction amount.

Is it better to carry cash or forex card?

It is better to carry a forex card because it gives you rewards and also is easy and suitable to carry.

What is forex card disadvantages?

Disadvantages include high charges, not being accepted on local places and high renewal charges.

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