On ₹1 lakh of overseas spending, an Indian traveller can lose nothing, or more than ₹8,000, depending only on how they pay and where they book. The biggest avoidable leak is saying yes to "pay in INR" abroad. The most misunderstood one is TCS, which fell to a flat 2% on tour packages from 1 April 2026.
Rules and rates checked on 12 October 2026. This report is updated every quarter.
The five leaks at a glance
| Leak | Typical cost per ₹1,00,000 | Avoidable? |
|---|---|---|
| Dynamic currency conversion (pay in INR abroad) | ₹5,000–8,000 | Yes: choose local currency |
| Standard card markup, 3.5% + GST | ₹4,130 | Yes: zero-markup card |
| Premium card markup, 2% + GST | ₹2,360 | Yes: zero-markup card |
| TCS on a tour package, 2% | ₹2,000 blocked until tax filing | Partly: credited against tax, or book flight and hotel separately |
| GST on buying forex | ₹180 | No, but small |
Leak 1: TCS on overseas packages and forex
From 1 April 2026, TCS on an overseas tour package is a flat 2% from the first rupee, down from 5% up to ₹10 lakh and 20% above it. The trap now is not the rate. It is whether your purchase counts as a package, and which channel you pay through.
| What you buy or pay with | TCS from 1 Apr 2026 | TCS until 31 Mar 2026 | Who collects |
|---|---|---|---|
| Overseas tour package (flight + hotel + transfers or sightseeing, sold as one) | 2% of the full value, no threshold | 5% up to ₹10 lakh, 20% above | Tour operator or travel site selling the package |
| Standalone international flight ticket | Nil (not a package) | Nil | — |
| Standalone overseas hotel booking | Generally nil; depends on how it is sold | Same | — |
| Forex card load, foreign cash, debit card spends abroad, remittances | Nil up to ₹10 lakh a year, 20% above | Same | Bank or forex dealer |
| Remittance for medical treatment or self-funded education | Nil up to ₹10 lakh, 2% above | Nil up to ₹10 lakh, 5% above | Bank |
| International credit card used while abroad | Nil (outside LRS) | Nil | — |
The legal reference changed too: Section 206C(1G) of the 1961 Act is now Section 394 of the Income-tax Act, 2025. TCS is not a final cost; it is credited against your PAN. It still blocks cash for months.
Worked examples
| Package value | TCS in FY 2025-26 | TCS in FY 2026-27 | Cash no longer blocked |
|---|---|---|---|
| ₹2,00,000 (couple, Bali, 6 nights) | ₹10,000 | ₹4,000 | ₹6,000 |
| ₹5,00,000 (family of four, Dubai) | ₹25,000 | ₹10,000 | ₹15,000 |
| ₹15,00,000 (group, Europe) | ₹1,50,000 | ₹30,000 | ₹1,20,000 |
What to check at checkout
- Is the seller still charging 5% or 20%? Old billing software may not have been updated. Any rate other than 2% on a package paid for after 1 April 2026 is worth questioning.
- Is TCS shown as a separate line, with your PAN captured? Without PAN, your credit may not show up in your tax statement.
- Is TCS calculated on the package value only, or on GST and convenience fees too?
- Could the trip be bought as separate flight and hotel bookings instead? Those generally carry no TCS, though prices and protections differ.
Leak 2: forex markup on cards
Most mainstream Indian credit cards still add 3.5% to every foreign-currency spend, and 18% GST on that markup takes the real cost to about 4.13%. On a ₹1 lakh trip spend, that is ₹4,130 you never see as a line item, only as a worse rate.
| Card tier (examples) | Markup | With 18% GST | Cost on ₹1,00,000 |
|---|---|---|---|
| Standard cards at the big four banks (most HDFC, SBI Card, ICICI, Axis cards) | 3.5% | 4.13% | ₹4,130 |
| Mid-tier travel cards (for example SBI Card Miles) | 3% | 3.54% | ₹3,540 |
| Premium cards (HDFC Infinia, Diners Black, Regalia Gold; Axis Atlas, Magnus; SBI Card Elite, Aurum) | 1.99–2% | 2.35–2.36% | ₹2,350–2,360 |
| Zero-markup cards (Scapia; IDFC FIRST WOW; AU Nexus and ixigo AU on RuPay) | 0% | 0% | ₹0 |
Zero markup is not zero cost: the card network's own exchange rate still applies, and RuPay cards are accepted at fewer merchants abroad. Markups change often, so check your card's Most Important Terms and Conditions (MITC) before you travel.
Forex prepaid cards
Bank forex cards rarely show a markup on spends in the loaded currency. The cost sits in the load rate and in fees: issuance, reload, ATM withdrawal, and a cross-currency charge of about 2–3.5% when you spend in a currency you did not load. Loads also count towards the ₹10 lakh limit for TCS; credit card spends abroad do not.
Leak 3: dynamic currency conversion (pay in INR abroad)
When a card machine, ATM or checkout page abroad offers to charge your Indian card "in INR", saying yes is almost always the most expensive choice. The merchant's provider sets its own rate, typically 3–6% worse than the card network's, and some Indian banks now add their own fee on top. HDFC Bank, for example, charges a 1.75% markup from 15 May 2026 on INR transactions at international locations or with merchants registered overseas.
Where it shows up
- Card machines at hotels, airport shops and restaurants abroad, often pre-set to INR.
- ATMs abroad that offer to "lock in" the rupee amount.
- Foreign booking and airline websites that charge in INR using their own conversion.
- Foreign-registered merchants billing in INR while you are in India.
Cost of a USD 1,000 hotel bill, by how you pay
Illustration at ₹96 per USD; base cost at the network rate is ₹96,000.
| How you pay | Extra cost | Extra on ₹96,000 |
|---|---|---|
| Zero-markup card, charged in USD | 0% | ₹0 |
| Premium card (2% markup), charged in USD | 2.36% | ₹2,266 |
| Standard card (3.5% markup), charged in USD | 4.13% | ₹3,965 |
| Accept INR at the terminal (3–6% merchant margin + 1.75% bank fee + GST on the fee) | about 5.1–8.1% | about ₹4,870–7,750 |
Leak 4: booking in INR vs USD
The cheapest-looking price is not the cheapest charge. The same room or seat can land on your card statement at four different rupee amounts, depending on who converts the currency and which fees ride along.
| Route | Who converts | Fees that can apply | TCS |
|---|---|---|---|
| Indian travel site or airline, priced in INR | The seller, inside its INR price | Convenience or service fee, 18% GST on that fee | Nil for flight or hotel alone; 2% if sold as a package |
| Foreign site, charged in USD or local currency | Card network | Card markup + 18% GST on it (0 on a zero-markup card) | Nil |
| Foreign site, charged in INR | The foreign site's own rate | Site's FX margin; bank fee on some cards (for example HDFC, 1.75%) | Nil |
| Hotel "pay at property" abroad | Card machine or card network, decided at checkout | INR conversion risk (Leak 3) or card markup | Nil |
How to compare one booking
- Note the price in both currencies on each site at the same time.
- Note every fee added between the search page and the payment page.
- Convert foreign prices at the card network rate for the day, then add your card's markup and GST.
- Compare the all-in rupee totals, not the search prices.
Also watch for taxes and resort fees payable at the property in local currency, which sit outside the online total, and for "pay now" and "pay later" rates that differ for the same room.
Leak 5: GST on buying forex and small fees
Buying forex cash or loading a forex card carries 18% GST on a deemed service value, not on the full amount. It is small on its own, but it stacks with load fees, ATM charges and convenience fees.
| Currency bought (₹) | Deemed service value (CGST Rule 32) | GST at 18% |
|---|---|---|
| 50,000 | 1% = ₹500 (minimum ₹250) | ₹90 |
| 2,00,000 | ₹1,000 + 0.5% of the part above ₹1 lakh = ₹1,500 | ₹270 |
| 5,00,000 | ₹1,000 + 0.5% of ₹4 lakh = ₹3,000 | ₹540 |
| Above 10,00,000 | ₹5,500 + 0.1% of the part above ₹10 lakh, capped at ₹60,000 | Up to ₹10,800 |
How we test (mystery-shopper method)
From Q4 2026 this report adds mystery-shop results: the same routes, dates and traveller profile across Indian travel sites, global booking sites, airlines, hotels and tour operators, captured within one 60-minute window with a timestamped screenshot at every step. The first round covers Delhi–Dubai, Mumbai–Ho Chi Minh City and Delhi–Bali for 2 adults, plus 4-star hotels and tour packages in Dubai, Vietnam and Bali.
- Logged out, private browsing, Delhi location, cookies cleared before each seller.
- Every fee, tax and currency choice is logged with the checkout step where it first appears.
- Card network and RBI reference rates are recorded at the same minute.
- Findings describe what was shown, where and when, for example "convenience fee first shown at step 4 of 5". Each named seller sees its findings seven days before publication, and any reply is published alongside.
Scoring rubric
| Criterion | Points | Full marks | Zero marks |
|---|---|---|---|
| Price gap: search price to final payable amount | 30 | Final amount within 2% of the first price shown | More than 10% above it (straight line in between) |
| Fee timing: step where each mandatory fee first appears | 20 | All mandatory fees on the first price screen | A mandatory fee first shown on the payment screen |
| Currency clarity: INR default, rate disclosure | 20 | Local currency by default, or INR rate and margin shown before payment | INR pre-selected with no rate or margin shown |
| Tax accuracy: TCS rate, GST, PAN | 15 | Correct 2% TCS on packages, GST on fees itemised, PAN asked where needed | Wrong TCS rate, or tax not itemised |
| Cancellation and refund terms in rupees | 15 | Refund amount and currency shown before payment | Terms in foreign currency only, or not shown |
Grades: A (85–100) clear; B (70–84) minor gaps; C (55–69) watch the checkout; D (40–54) costly surprises likely; E (below 40) the price shown is not the price paid. A criterion that does not apply is dropped and the score rescaled to 100.
Traveller checklist
- Pay abroad in local currency, never INR, at card machines, ATMs and checkout pages.
- Use a zero-markup or premium card for foreign-currency spends; keep a standard card as backup only.
- Before booking a package, confirm TCS is 2% of the package value, shown as its own line, with your PAN captured.
- Price the same trip as separate flight and hotel bookings; standalone bookings carry no TCS.
- Compare final rupee totals, not search prices.
- Keep forex card loads and debit card spends abroad within ₹10 lakh a year to avoid 20% TCS; credit card spends abroad do not count.
- Check taxes and resort fees payable on arrival.
Planning a trip to the UAE, Vietnam or Indonesia? Krosz handles the visa for a flat ₹1,999 + GST service fee, shown in full and in rupees before you pay. Check your visa →
Sources and change log
- TAXAJ: TCS on foreign tour packages, FY 2026-27
- Outlook Business: Budget 2026 cuts TCS to 2%
- Kotak Bank: LRS and TCS FAQ
- RBL Bank: TCS on LRS from 1 April 2026
- Business Standard: credit cards outside LRS
- BankBazaar: SBI Card international charges
- CardInsider: HDFC forex markup by card
- Wise: forex card charges in India
- CardAdvisor: HDFC currency conversion markup change, May 2026
- Outlook Money: why overseas swipes cost more
- Standard Chartered India: GST on forex
12 Oct 2026 (Q4 2026): first edition: rules, worked examples, method and rubric. Mystery-shop results are added after the November 2026 round.