TCS & LRS for Travel Agents, Explained Simply (2026)

Nothing derails a booking conversation faster than TCS. The customer sees a tax line they were not expecting on a Europe package and concludes you are padding the bill. You then spend twenty minutes explaining something that is genuinely not your charge — usually badly, because the rules move and nobody is sure which number is current this week.

So this guide is built the other way round. Every figure that can change sits in one box, below. Everything after that box is the mechanism — what TCS is, who it belongs to, how it accumulates, and the words to use with an unhappy customer. That part does not change when a budget moves a rate.

What TCS is — and what it is not

TCS (Tax Collected at Source) is not a cost of the trip, and it is not your revenue. When you sell an overseas tour program package, the law makes you a collection agent for the income-tax department: you collect a percentage on top of the package price, deposit it against the buyer's PAN, and the buyer sets it off against their own income-tax liability — or gets it refunded — when they file their return.

The mental model that ends most arguments: it is the customer's own income tax, paid early, through you. It behaves exactly like the TDS their employer already deducts from their salary. Money leaves their hand sooner; it does not leave their hand permanently. Your agency is a conduit, not a beneficiary — you never book a rupee of it as income, and you owe every rupee of it to the government.

What triggers it

The trigger is an overseas tour program package — broadly, a package for travel outside India that bundles two or more components such as transport, accommodation or sightseeing. Two consequences agents miss:

• A "custom itinerary" is still a package. Flights plus a hotel for Bali, put together by you and sold at your price, is an overseas tour package whatever you called it in the chat. If it is international and bundled, assume TCS is in play and check.
• Domestic is out of scope. Kashmir, Andaman, a Kerala houseboat — no TCS, however large the invoice.

The threshold is gone — and that is the change most agents have missed

If you learned this rule any time before April 2026, you learned it as a slab: a lower rate up to a cumulative limit per buyer per financial year, a much higher rate above it. Tracking that running total was the hard part of the job.

For overseas tour packages, that structure no longer exists. The rate is a flat 2% applied to the package, from the first rupee, with no exempt slab to cross. A ₹80,000 Thailand package attracts it. So does a ₹12 lakh Europe itinerary. There is no longer a figure to watch for, and no longer a point at which the rate jumps.

Two practical consequences. The first is pleasant: the arithmetic is now trivial, and the old trap — under-collecting on a repeat customer because nobody checked what they had already spent this year — cannot happen on packages. The second is less pleasant: small packages now attract TCS that previously did not. If your quoting habits were formed under the old slab, you are probably under-collecting on exactly the bookings you think are too small to worry about.

Do keep a per-customer, per-financial-year total anyway. The slab is gone; the reporting is not, and your quarterly return still wants cumulative figures per buyer.

Careful: the ₹10 lakh figure you may have heard still exists — for something else

Two rules that look similar sit next to each other, and conflating them is the easiest mistake available right now.

A tour package you sell: flat 2%, no threshold, collected by you. A bare foreign remittance under the Liberalised Remittance Scheme — a parent wiring university fees, someone sending money abroad for treatment or investment — has a ₹10 lakh annual threshold, and above it the rate depends on purpose: 2% for education and medical, 20% for anything else. That one is collected by the bank, not by you.

So when a customer tells you their CA said the limit is ₹10 lakh, they are not wrong — they are quoting the rule for the wrong transaction. The ₹10 lakh never applied to your packages as an exemption, and today it does not apply to them at all.

PAN is non-negotiable

TCS is deposited against a PAN. Without one, the credit lands nowhere, the customer cannot claim anything back, and the rate rises from 2% to 5% anyway. That combination means a booking without a PAN is more expensive for the customer and more risk for you.

So collect PAN at booking, for every international package — not at invoicing, and never after departure. Make it part of the same message in which you ask for passport copies; it stops being an awkward request when it arrives alongside three other routine ones. If a buyer refuses to share a PAN for a foreign holiday, treat that as information about the booking.

What to say to the customer

Say it once, early, in plain language — before the invoice, not after it:

"That TCS line isn't our charge and it isn't part of the cost of your trip. It's your own income tax, collected in advance because the government requires it on foreign travel. It goes to the tax department against your PAN, and when you file your return you adjust the whole amount against what you owe — exactly like the TDS your employer already deducts. Most of our clients either get it refunded or pay that much less tax."

Then put it as a separate, clearly-labelled line on the quotation and on the invoice. Burying TCS inside the package price looks like a markup and destroys trust the moment the customer works it out. Showing it separately, with one sentence of explanation next to it, does the opposite — it makes you look like the agent who knows the rules.

One more line worth having ready, because it is the follow-up question every time: "No, it doesn't depend on how you pay or which card you use — it applies to the package itself."

Where agencies get burned

1. Still applying the old slab. Treating small packages as below a threshold. There is no threshold on packages any more — the shortfall is yours, with interest.
2. Quoting before checking. The customer has been told a number. Discovering the correct TCS afterwards means either an embarrassing revision or absorbing it.
3. Collecting but depositing late. Collected TCS must be deposited and reported on time through the quarterly return. Interest and late fees stack up quietly and are not recoverable from the customer — ask your CA which form and due dates apply for the current year, because these were renumbered along with the rest of the Act.
4. Issuing no certificate. The buyer needs the TCS reflected against their PAN to claim it. If your filing is wrong or late, they find out at return-filing time and blame you — correctly.
5. No PAN on file. See above. Chase it at booking.
6. Assuming last year's numbers. These figures have moved more than once in recent years. Check the box above against your CA at the start of every financial year, and after every budget.

Make the software do it

This is exactly the kind of rule a human forgets at 7pm in peak season and software never does. TourBrain flags international trips automatically, applies the current rate against the buyer's financial-year usage, and puts TCS as a clean, separate line on the quotation and the GST invoice (more on GST and TCS invoicing in TourBrain). If the buyer has no PAN, TourBrain applies the higher TCS rate. Start 14-day trial and stop carrying this in your head.

For the rest of the price block — per-person rates, child pricing and the GST split — see why your quote needs a per-person price, or price one directly in the Package Price Builder.

Last updated: 13 September 2026. Rates and thresholds move with every budget, which is why this guide keeps all of them in a single box near the top. This is general information for travel agency owners, not tax advice — confirm your position with your chartered accountant before you collect or deposit anything.