Here's Why International Trips Will Get Expensive From July 1

The post-pandemic phase has witnessed a significant increase in travel as individuals and families strive to escape the daily chaos and find solace in new surroundings. Whether it's a quick local getaway or an adventure to international destinations, people are eager to explore and rejuvenate themselves. Consequently, travel bookings are seeing an unprecedented surge.

According to reports, travel bookings have soared by an impressive 30 to 40 per cent this season, indicating a strong desire to venture beyond the confines of home.

The surge in travel bookings has also been attributed to the anticipated increase in foreign travel expenses, prompting travellers to plan a trip abroad before the surcharges are implemented.

The impending charges will now be effective from July 1, 2023. According to the Budget 2023 announcement, there will be a significant increase in the Tax Collected at Source (TCS) rate on foreign remittances, including tour package bookings. The TCS rate will rise sharply from 5% to 20% of the total transaction amount, meaning if the air travel cost is INR 50,000, the corresponding TCS amount would be INR 10,000, equivalent to 20%.

The 20% TCS rule, as per the finance ministry circular issued on May 16, applies to foreign tour packages and credit card transactions on international purchases. This means that even direct bookings for international travel will fall under the purview of the 20% TCS.

Here's what other travel trends say

Even the International Air Transport Association (IATA) has predicted a peak travel season for the Northern summer holidays. According to their recent survey involving 4,700 travellers from 11 countries, an impressive 79% of respondents have confirmed plans to embark on a trip between June and August 2023.

Additionally, 80% of participants are assured that post-pandemic challenges have been resolved and they can set out on a smooth trip, despite the likeliness of disruptions.

Interestingly, the first-quarter forward booking data for May to September 2023 reveals a booking rate of 35 per cent, surpassing the previous year. Notably, the Asia Pacific region is anticipated to have the highest booking rate, with a remarkable growth rate of 134.6%. Following closely are the Middle East, Europe, Africa, Latin America, and North America.

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