You can pay for an overseas trip under the RBI's Liberalised Remittance Scheme (LRS): flights, hotels, forex cards, tour packages and spending money all count towards the $250,000 each resident can send abroad in a financial year.
Personal travel uses purpose code S0306 and business travel S0301. Travel you book yourself attracts no TCS on the first ₹10 lakh a year and 20% above that, while tour packages bought from an operator attract a flat 2%. You claim TCS back in your tax return.
Below is what qualifies as travel, what does not, which purpose code to use, how credit cards are treated and how TCS works.
Table of contents
- What travel expenses can you pay under LRS?
- What cannot be paid under the travel code?
- Which payments need a different purpose code?
- Do international credit card spends count under LRS?
- How much TCS applies to travel?
- How do you claim back TCS on travel?
What travel expenses can you pay under LRS?
Below are the detailed expenses which are legal as per the RBI guidelines:
Flights and Air Tickets | Payments to international or domestic airlines for overseas journeys. |
Hotels and Accommodation | Prepaid or direct settlement of hotel bills, Airbnbs, serviced apartments abroad. |
Tour Packages | Whether booked through an Indian travel operator or directly with a foreign operator, both qualify. (The TCS treatment differs; see the TCS section below.) |
Daily Living Expenses | Food, shopping, entertainment, internal travel, and other personal expenses while abroad. |
Internal Transport Abroad | Domestic flights abroad, train tickets, taxis, car rentals, ride-hailing apps, ferries. |
Pilgrimage Travel | Expenses for Hajj, Umrah, or other recognised pilgrimages |
Conferences, Seminars & Training | Registration fees and related travel expenses for attending conferences, trade fairs, or specialised training abroad. |
Medical Travel | Overseas treatment, hospital bills, and attendant expenses. |
Medical Attendant Travel | Airfare, stay, and living expenses for one attendant accompanying a patient. |
Education Travel & Student Living | One-time travel for joining a course abroad, plus hostel charges and living expenses for students. Tuition fees are separately remitted under education code. |
Cruises and Charters | Cruise bookings, on-board packages, yacht or charter rentals from foreign operators. |
Forex Card Loads and ATM Withdrawals | Loading a prepaid forex card before travel, or withdrawing cash from ATMs abroad using forex cards (within permitted cash limits). |
Travel Insurance | International health or travel cover purchased as part of the trip. |
Visa and Consular Fees | Payments to embassies, consulates, VACs, or online visa portals (e.g., ESTA, ETA). |
These are the RBI's purpose codes for travel, as mapped to LRS in its circular of 11 February 2016. You declare the code on Form A2:
Purpose | RBI purpose code | When to use |
Personal travel (holiday, visiting family) | S0306 | Flights, hotels, tour packages, leisure travel, visiting family or friends abroad. |
Business travel | S0301 | Business meetings, trade fairs, conferences or other work-related travel you pay for yourself. |
Pilgrimage | S0303 | Religious journeys such as Hajj, Umrah or other recognised pilgrimages. |
Medical travel | S0304 | Hospital treatment abroad, the patient's stay, and the ticket, hotel and living costs of one attendant. |
Education travel | S0305 | Tuition, hostel charges, the ticket to join the course and living expenses for students abroad. |
Note: The RBI does not release foreign exchange for travel to Nepal and Bhutan. If you attempt to remit funds under the “travel” head, banks may flag or reject the transaction. Expenses for these destinations should be settled in INR or through local payment arrangements.
What cannot be paid under the travel code?
Some remittances cannot be routed under the “travel” head, even if they occur while abroad:
Lotteries, Gambling & Betting | Remitting money to a casino account during your holiday. |
Speculative Forex & Margin Trading | Outward remittances cannot be used for forex trading, margin calls, or derivative bets. |
FCCB Purchases | Buying Foreign Currency Convertible Bonds of Indian companies abroad is prohibited |
Transfers to FATF Blacklisted Countries | Remittances to “non-cooperative” jurisdictions are barred. |
Sending Money to Another Indian’s Overseas Account | RBI does not allow you to use your LRS limit to fund another Indian resident’s foreign account. Each person must use their own LRS limit directly. |
Which payments need a different purpose code?
Some expenses are fully permitted under LRS, but they take a different purpose code, not the travel head.
Category | Why it is not travel | Purpose code |
Property abroad | Buying property overseas is an investment, not a travel expense. | S0005 (Indian investment abroad in real estate), with the sale agreement. See LRS for property purchase. |
Funding an overseas brokerage account | Permitted under LRS, but it is an investment. | S0001 (equity) or S0002 (debt). See LRS for investments. |
Bank account or deposit abroad | A capital account transaction, not travel. | S0023 (opening a foreign currency account abroad with a bank). |
Donations to foreign charities | Permitted, but not under travel. | S1303 for donations to charitable and religious institutions, S1302 for gifts to individuals. See LRS for gifts and donations. |
Do international credit card spends count under LRS?
No, not while you are abroad.
In May 2023 the government notified a change that would have brought international credit card spends under LRS, but the Finance Ministry's press release of 28 June 2023 put it on hold: spends on international credit cards while overseas are not counted under LRS and attract no TCS. That is still the position, so the hotel bills and shopping you put on a credit card during the trip do not use your $250,000 limit.
Debit cards and forex cards are different. Loading a forex card is an LRS remittance, and debit card spends abroad count under LRS too, so both add up towards your limit and the ₹10 lakh TCS threshold.
How much TCS applies to travel?
Your bank collects TCS under section 394 of the Income-tax Act 2025 once your LRS remittances in a financial year cross ₹10 lakh per PAN, across all purposes and banks. Overseas tour packages are the exception: the operator collects 2% from the first rupee.
Type of travel payment | TCS rate | How it works |
Travel you book yourself (flights, hotels, forex card loads, debit card spends abroad) | 20% | On the amount above ₹10 lakh remitted under LRS in the financial year. |
Overseas tour package bought from an operator | Flat 2% | Collected by the operator on the full price, with no threshold. |
Medical travel | 2% above ₹10 lakh | With hospital documents, under S0304. |
Education travel | 2% above ₹10 lakh, nil if funded by an education loan from a financial institution | With the admission letter and fee schedule, under S0305. |
Note: The flat 2% applies only when you buy an overseas tour package, a bundle of travel and stay sold by a tour operator. Flights, hotels and forex you book yourself fall under the general rate instead: nil on the first ₹10 lakh a year and 20% above it.
How do you claim back TCS on travel?
TCS collected on your overseas travel spend is not an additional cost, it is an advance tax. You can adjust it against your final income-tax liability or claim it as a refund.
Where TCS appears
- Every bank, forex dealer, or tour operator that collects TCS deposits it against your PAN.
- These entries automatically show up in your Form 26AS (Form 168 from Tax Year 2026-27) and Annual Information Statement (AIS) on the income-tax portal.
How to claim it in your tax return
- While filing your Income Tax Return (ITR), go to the Taxes Paid section.
- Enter the TCS amounts reflected in 26AS/AIS.
- The system automatically adjusts this against your overall income-tax liability.
- If your liability is lower than the TCS already collected, the excess will be refunded to your bank account.
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