A growing number of Indians are losing money because they fail to claim Tax Collected at Source (TCS) on overseas tour packages—even when the credit clearly appears in Form 26AS.
Tax experts say confusion over recent TCS rate changes and a poor understanding of the system are the main reasons.
TCS is collected by sellers during certain transactions, such as foreign remittances, overseas trips, or buying specific goods and services.
It is a prepaid tax, not an additional cost, designed to improve compliance and reporting.
Why Taxpayers Often Skip TCS Credit
According to CA Shefali Mundra, many travellers think TCS is an extra fee rather than advance tax.
The recent increase in TCS rates—from 5% to 20% for certain foreign spends—has added to the confusion.
Even when the TCS credit appears in Form 26AS, many taxpayers either don’t file returns or forget to enter the TCS amount correctly in their ITR.
Mundra explains, “The credit exists but is under-utilised because the mechanism to claim it isn’t fully understood.”
How to Use TCS Effectively
TCS automatically adjusts against advance tax or self-assessment tax.
No special procedure is needed.
Taxpayers just need to ensure their TCS entry is correct in Form 26AS and in the tax section of their return.
“If your tax payable is lower than the TCS collected, the balance becomes a refund,” says Mundra.
Avnish Arora, Executive Director at Forvis Mazars India, adds that the TCS rate—5% or 20%—does not affect the right to claim it.
Once TCS appears in Form 26AS, it works like TDS and can be fully claimed as credit.
What to Do if TCS Isn’t Deposited
If the tour operator hasn’t deposited TCS or it doesn’t appear in Form 26AS, taxpayers should:
Request a TCS certificate (Form 27D) from the operator.
Ask the operator to correct the filing.
Use the tax portal’s “tax credit mismatch” facility.
Arora points out that courts have generally ruled that taxpayers should not suffer if the collector fails to deposit tax, though resolving this may require representations or litigation in some cases.
