TCS on Overseas Tour Packages

Hi CA Pradeep Patil,

Thank you for raising this important issue.

You're absolutely right in questioning the applicability of TCS (Tax Collected at Source) under Indian tax laws when the buyer is a non-resident and not subject to Indian income tax.

📌 Background – TCS on Overseas Tour Packages (Section 206C(1G)(b))

Under Section 206C(1G)(b) of the Indian Income-tax Act:

• A seller of an overseas tour program package is required to collect TCS at 5% from the buyer, if the buyer is a resident of India.

🔸 The key term here is: "buyer who is a resident in India".

✅ So what’s the correct position in your case?

🚫 You are not a resident in India:

You mentioned your company is based in Dubai, so:

• You are not a “buyer resident in India”.

• Therefore, TCS under section 206C(1G)(b) does not apply to you.

❌ Common Misunderstanding by Sellers

Many Indian sellers mechanically apply TCS to all transactions involving overseas tour packages — even to foreign buyers, out of caution or ignorance. But that is not supported by the law.

✅ Official Clarification

CBDT (Central Board of Direct Taxes) had issued guidelines dated 30.03.2020 and 29.09.2020, which clearly state:

“TCS is applicable only if the buyer is a person resident in India.”

(Source: CBDT Circular No. 17/2020 and Clarification dated 29.09.2020 on TCS provisions)

🔁 What You Can Do

1. Share your non-resident status formally with the Indian TMC:

   • Provide a declaration or TRC (Tax Residency Certificate) showing your Dubai tax residency.

   • Also, provide a copy of passport/registration documents to establish non-resident status.

2. Politely refuse TCS payment, citing:

   • Section 206C(1G)(b) applies only to resident buyers.

   • You are not liable to pay tax in India and not eligible to claim refund.

3. Ask for a revised invoice without TCS.

⚠️ If They Still Insist:

If the Indian seller refuses and still collects TCS:

• Unfortunately, you will bear an additional cost without refund capability.

• You can escalate the issue to the CBDT or via industry bodies in India for clarification, but that would take time.

✅ Summary: