Millions of Indian travellers go abroad each year but often carry outdated ideas about foreign exchange (forex) that cost them extra money. Here are four common myths about forex and the facts you need to save money.
Myth 1: Forex transactions always attract 20% TCS
Reality: Most travellers do not pay Tax Collected at Source (TCS) on forex transactions up to Rs 10 lakh per financial year. Above this limit, TCS rates vary by purpose—5% for education or medical expenses, and 20% for other uses.
Importantly, any TCS paid can be claimed back as a tax credit when filing income tax returns. This means TCS is not a final tax but an advance collection.
Smart Tip: Don’t avoid forex cards fearing TCS. They remain efficient and tax-friendly travel money options.
Myth 2: Carrying cash abroad is best
Reality: Carrying large amounts of cash is risky and expensive. You can carry up to $3,000 in cash, but cash purchases cost 2–6% more than loading money onto a forex card due to inventory and supply costs. Cash is also easy to lose and offers no control or tracking.
Smart Tip: Carry only 10–20% of your travel money in cash for small expenses. Load the majority on a forex card designed for foreign use.
Myth 3: All forex cards are the same
Reality: Forex cards vary widely. Traditional bank cards often charge 2–3.5% markup, support fewer currencies, and have slow reload processes. Modern fintech forex cards offer zero markup, instant reloads via apps, better security, and transparent costs.
Smart Tip: Choose fintech-powered forex cards for better rates and real-time control, avoiding bank queues.
Myth 4: Credit or debit cards are cost-effective abroad
Reality: Using credit/debit cards abroad can be costly. Banks charge 1–3% foreign transaction fees, and merchants may apply Dynamic Currency Conversion (DCC), converting your bill to Indian Rupees at inflated rates—sometimes up to 12%. This exposes you to currency fluctuations and higher costs.
Smart Tip: Avoid using credit/debit cards for foreign spends when possible. Forex cards offer more stable and lower-cost currency exchange.
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