TCS on a foreign tour package is not an extra cost. It is tax collected in advance on your behalf, and you claim it back in full when you file your return. Almost nobody in Indian travel explains this, which is why it reads as a surcharge on quotes and puts people off booking.
Here is the mechanism, and what to check on any quote.
What is TCS on a tour package?
Tax Collected at Source under Section 206C(1G) of the Income Tax Act. When you buy an overseas tour package from an Indian operator, the operator is required to collect a percentage of the package value from you and deposit it with the government against your PAN.
It then appears in your Form 26AS and your Annual Information Statement, and it offsets your income tax liability exactly like TDS on salary does. If your liability is lower than the total tax already collected, you get a refund.
How much is it?
The rate applying to overseas tour programme packages was reduced in the Union Budget presented in 2026. Previously the structure was tiered: 5% on the first ₹7 lakh per person per financial year, and 20% above that threshold.
Because this rate has changed more than once in recent years, do not take a figure from a blog — including this one — as final. Verify against the Income Tax Department or your chartered accountant, and require your operator to state the rate and amount on the invoice. We show the applicable rate and the rupee amount separately on every overseas quote.
What is TCS charged on?
The overseas tour programme package — broadly, a package that includes travel plus at least one of accommodation, sightseeing or similar expenditure. Everything on our international holiday packages list meets that definition; domestic trips do not. Points worth knowing:
- It applies to the package value, not to your income.
- A standalone international air ticket, bought on its own, is treated differently from a package.
- The threshold and rate apply per person per financial year, aggregated across operators — so two trips in one year can be treated differently from one.
- Not having PAN and Aadhaar linked can push you into a higher rate.
How do you get the money back?
Three steps.
- Give the operator your correct PAN at the time of booking. Without it, the collection happens at a higher rate and cannot be traced to you.
- Collect the TCS certificate (Form 27D) from the operator after the trip, and check the amount appears in your Form 26AS and AIS.
- Claim it in your ITR under taxes already paid. It reduces your liability rupee for rupee, and any excess is refunded.
Salaried travellers can also ask their employer to account for TCS when computing TDS on salary, which avoids waiting until filing to see the money.
Does GST apply as well?
Yes, and it is a genuinely different thing. GST on tour operator services is 5% on the total package value, charged without input tax credit. Unlike TCS, GST is a real cost — it is not refundable to you.
So an overseas package quote should show three numbers, not one: the package price, 5% GST, and the TCS amount. If a quote shows only a single all-in figure, ask for the split. An operator that cannot produce it is not accounting for it properly. Every overseas quote we issue shows those three lines separately, whether it is a Switzerland luxury tour package or a Dubai weekend package.
What should you check before you pay?
- Is the TCS rate and rupee amount stated separately on the invoice?
- Is your PAN recorded correctly, and linked to Aadhaar?
- Will the operator issue Form 27D, and by when?
- Is GST shown as 5% of the package value?
This is general information about how the mechanism works, not tax advice. Rates and thresholds change with each Union Budget. Confirm your own position with a chartered accountant before making a decision that depends on it.
