# TCS under Section 206C(1G)

## Two Distinct Triggers

### A. Sale of Overseas Tour Programme Package (by tour operator)

The seller of an overseas tour package must collect TCS from the buyer on receipt of the package amount.

Amount slab	TCS rate
Up to ₹10,00,000	5%
Above ₹10,00,000	20%

### B. Remittance under Liberalised Remittance Scheme (LRS) — by Authorised Dealer

When a person remits foreign currency under LRS through an authorised dealer (bank):

Purpose	TCS rate
Education (financed by loan from specified institution)	0.5% above ₹7L
Education (other) or medical treatment	5% above ₹7L
Any other purpose	20% on amount above ₹10,00,000

## Important Threshold Rules

For overseas tour packages: NO threshold of ₹7L; first ₹10L is at 5%, balance at 20%.
For LRS (non-education/medical): TCS triggers only on amounts above ₹10 lakh in a financial year.
For LRS (education/medical): Threshold is ₹7 lakh; TCS at 0.5%/5%.

## Who is Liable to Collect?

Tour operator (seller of overseas package).
Authorised dealer (bank/financial institution) effecting the LRS remittance.

Worked example

### Example 1

Example 1 (Tour Package): Mr. Raja buys an overseas tour package worth ₹12,00,000 from M/s Thomas Cook.

Solution:

First ₹10,00,000 × 5% = ₹50,000
Balance ₹2,00,000 × 20% = ₹40,000
Total TCS = ₹90,000

### Example 2

Example 2 (LRS): Mr. Raja remits ₹13,00,000 under LRS through Bank of India for a purpose other than education/medical treatment.

Solution:

TCS applies only on amount above ₹10 lakh = ₹3,00,000
TCS = ₹3,00,000 × 20% = ₹60,000

⚠️ Common exam mistakes

Applying the ₹7 lakh LRS threshold to non-education/non-medical purposes — that threshold is ₹10 lakh.
Applying flat 20% on the entire tour package value — first ₹10L is at 5%, only excess at 20%.
Forgetting that overseas tour package TCS has NO threshold — even ₹50,000 attracts 5%.

Bare-Act text 206C(1G) · Income-tax Act, 1961 · click to expand

M/s. Thomas Cook, being a seller of an overseas tour programme package has to collect tax at source @5% till ₹10 lakhs and 20% thereafter under section 206C(1G) from Mr. Raja on receiving amount for purchase of package. Bank of India, being an authorized dealer has to collect tax at source under section 206C(1G) @20% on amount in excess of ₹10 lakhs remitted under the LRS since the remittance is not for the purpose of education and medical treatment.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Section 206C(1G) - TCS on Overseas Tour Packages and LRS Remittances

Worked example

⚠️ Common exam mistakes