If you’re planning an overseas vacation and spend more than ₹2 lakh on foreign travel, you must file an Income Tax Return (ITR)—even if you don’t have taxable income. This requirement, introduced under the seventh proviso to Section 139(1) of the Income Tax Act, ensures that high-value foreign transactions are disclosed to the tax department.
Key Rules to Remember:
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Mandatory ITR Filing: Anyone spending over ₹2 lakh on foreign travel (for themselves or others) must file an ITR.
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Tax Collected at Source (TCS): From April 2025, tour packages above ₹7 lakh attract a 20% TCS; those between ₹2–7 lakh attract 5%. For other foreign remittances (like international debit/credit card use), TCS is levied if expenses exceed ₹7 lakh.
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Business vs. Personal Travel: If travel is for business, expenses can be claimed, but foreign income earned may still be taxable in India depending on your residency status and double taxation rules.
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Card Transactions: Even if TCS is not deducted on foreign card spends, disclosure is required, and liability may arise.
Why It Matters:
Tour operators and banks are required to report the PAN of customers making high-value foreign transactions. So even if you don’t pay income tax, not filing an ITR after such expenses may land you on the tax department’s radar.
The Bottom Line:
Foreign travel spending is now closely monitored. Whether for leisure or business, ensure you file your ITR and disclose relevant expenses. Proper compliance can save you from penalties and unnecessary scrutiny.
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