How to pay foreign DMCs and hotels from India, legally

Your Bali DMC wants the deposit by Friday. Your net banking app is open. The fastest route looks obvious: send it through your own savings account under your personal foreign remittance quota, the same way you'd pay for a holiday of your own.

That route is common among small outbound operators, and it is not legal for a business payment. The Reserve Bank's Liberalised Remittance Scheme (LRS) is built for resident individuals sending their own money abroad, not for a firm or company settling a supplier invoice, and mixing the two exposes your agency to a FEMA problem it doesn't need.

This is the playbook for how an outbound tour operator actually pays a foreign DMC or hotel from India: which route applies to a business, what Form A2 and the purpose code are for, when TCS bites and when it doesn't, and what a CA certificate has to do with it.

Why the LRS route is wrong for a business payment

Under RBI's Liberalised Remittance Scheme, only resident individuals may remit funds abroad, up to USD 250,000 per financial year, and HUFs, partnership firms, companies and trusts are explicitly excluded from using it, per RBI's own LRS FAQ. A sole proprietor's personal LRS quota belongs to them as an individual, not to their travel agency's supplier ledger.

That matters because most small outbound operators in India are proprietorships or small partnerships, and the owner's personal savings account is the only foreign-remittance-enabled account they have. Wiring a DMC's Bali deposit out of that account, funded by client money that has already moved through the business, blurs a line RBI drew on purpose: LRS is for a person's own use (travel, education, gifts, investments), not for routing a company's trade payables.

Careful: If your bank later asks what a large personal remittance was for and the answer is "client group deposit for my travel agency," you're describing a business transaction dressed as a personal one. That's a compliance headache with your bank and potentially with FEMA, on top of whatever margin you were trying to protect by skipping a business account.

The fix isn't complicated. It just isn't the shortcut.

How a business is actually meant to pay a foreign supplier

A firm or company pays a foreign DMC or hotel as a current account transaction under FEMA, through its own current account with an authorised dealer (AD) bank, not through anyone's LRS quota. This is the standard route every registered business uses to pay for imported goods or services, and paying a DMC for tour arrangements or a hotel for room nights falls squarely into "import of services."

Two things are non-negotiable on this route: your firm's PAN, and a signed Form A2, both mandatory for outward remittance. The bank will not release the wire without them.

1. Open (or use) a current account in the business's name. A proprietorship can remit from a current account held in the proprietor's name for the business, but it needs to be the account your GST registration, invoices and books actually run through, not a personal savings account.
2. Fill Form A2, declaring the amount, currency, beneficiary (the DMC or hotel), and the purpose of the remittance.
3. Pick the correct RBI purpose code for what you're actually paying for (more below). The purpose code is how the bank and RBI classify the transaction, and picking the wrong one can flag the payment or delay it.
4. Attach the invoice or contract from the DMC or hotel, so the bank can match the purpose code to a real, invoiced supply.
5. Confirm whether the amount needs a CA certificate before the bank will process it (see the 15CA/15CB section below).

Form A2 and the purpose code for a travel services remittance

Form A2 is the standard declaration every bank requires before it will move money out of India, and the purpose code on it tells RBI what kind of transaction this is. For a tour operator paying a foreign DMC or hotel, the payment is typically coded as an import of travel or tourism-related services, or against a "travel" head, rather than a generic "other services" code that gives the bank less to go on.

Ask your bank's forex desk which specific code they use for travel-trade remittances before your first wire, and use the same one every time so your history with that bank stays consistent. Banks vary slightly in how granular their internal code lists are, and getting this wrong the first time is usually what causes a payment to sit in query for a day while the bank calls to ask "what exactly is this for."

Keep the DMC's invoice, your costing sheet for that group, and the client's booking confirmation on file against every remittance. That paper trail is what ties a supplier payment to a specific group and margin, and it's worth having in order before your next Europe or Bali batch, because the bank and your CA will both eventually ask for it.

Does TCS apply when you pay a foreign DMC?

No, not the TCS rate you're thinking of. The 20% TCS that applies on LRS remittances above ₹10 lakh in a financial year, outside the education and medical categories, is specifically a levy on individual remittances made under LRS. Your business's current-account payment to a DMC is not an LRS remittance, so that particular TCS trigger doesn't apply to it.

That is easy to get backwards, because operators are already used to a different TCS: the one they collect from clients on outbound tour packages. That is a separate, client-facing collection under a different provision, with its own rate and threshold, covered in full in the guide to TCS on overseas tour packages. It is not the same TCS as the LRS threshold above, and paying it correctly on your sales side does not exempt or duplicate anything on the supplier-payment side.

Example: Say your agency wires ₹18 lakh to a Dubai DMC across a financial year for hotel and transport arrangements on client groups. If that wire goes out through the business's current account against genuine import-of-service documentation, it is not an LRS remittance and the ₹10 lakh LRS-TCS threshold doesn't apply to it. If instead the same ₹18 lakh went out through the proprietor's personal LRS quota, you'd have both the wrong route and a TCS question to untangle.

Where business remittances do interact with tax is on the income side: whether TDS applies to any commission or fee component you're paying a foreign party, and how the payment sits in your books for GST purposes if reverse charge is triggered on any part of the arrangement. If your agency is still working out when it owes GST under reverse charge on inbound services, the reverse charge GST guide for travel agencies covers that mechanic separately from remittance rules.

When does a 15CA/15CB certificate come into the picture

Certain outward remittances need a chartered accountant's certification under the Income Tax Act before an AD bank will release the funds, over and above the FEMA paperwork. This is a separate check from the RBI/FEMA route described above, and it exists to confirm whether tax needs to be withheld on the payment before it leaves India.

The exact thresholds, exemptions and which category of payment needs a CA's certificate (and which needs a fuller Form 15CB versus a simpler self-declaration) change and depend on specifics like the nature of the payment and whether a tax treaty applies. Rather than guess at numbers here, the honest answer is: ask your CA, before your first remittance to a new DMC, which category your specific payment falls into and what they need from you to sign off. Get this settled once, in writing, and reuse the same checklist for every subsequent payment to that supplier.

Bank vs AD-II fintech routes: what changed

Traditional bank forex desks have handled outward remittance for decades, and they still work, though they can be slow and the RM handling your file may not deal with travel-trade payments often. In the last couple of years, RBI-authorised AD-II entities and fintech remittance platforms have built dedicated business outward-remittance products aimed at exactly this gap: purpose-code guidance, faster Form A2 processing, and rate transparency that a branch counter often doesn't offer.

Either route works as long as the entity is RBI-authorised to handle outward remittance and you're still supplying the same core documents: PAN, Form A2, the correct purpose code, and the invoice from your DMC or hotel. What differs is speed, the exchange rate margin you're quoted, and how much hand-holding you get on classification. If your rupee-denominated quotes have been squeezed by exchange rate movement lately, that's a costing problem worth solving on its own terms; the forex buffer guide for outbound quotes covers how to build rate movement into your pricing rather than absorb it on the remittance side.

Card and wallet alternatives DMCs actually accept

Not every DMC or hotel payment needs a full wire transfer. For smaller amounts, deposits, or suppliers you're testing before committing a full group's payment, a business international card (a corporate credit card with foreign transaction capability, not a personal card) or a business forex/travel card product can settle a DMC invoice faster than a wire, usually at a small markup over the interbank rate.

Some larger DMCs and hotel chains also accept payment through international card networks directly on their own booking or B2B portals, which sidesteps the remittance question for that specific transaction because the card issuer, not you, is the one remitting. Whichever method you use, match it to the size and frequency of the payment: a card for a ₹40,000 deposit, a proper Form A2 wire for a ₹15 lakh season's worth of hotel blocks.

Careful: Before wiring any meaningful sum to a new DMC, however you're paying, confirm the supplier is who they say they are. A fake DMC fraud checklist is worth running through once before your first payment to any new overseas contact, because a clean Form A2 and a legitimate-looking invoice do not protect you from a fraudulent beneficiary.

Common questions

Can I use LRS for a business payment to a foreign DMC?

No. LRS is restricted to resident individuals remitting for their own purposes, and firms, companies, HUFs and trusts are excluded from using it altogether. A business payment to a foreign DMC or hotel has to go out through the business's current account as a current account transaction under FEMA, not through anyone's personal LRS quota.

What documents do I need for an outward remittance to a foreign supplier?

At minimum: the business's PAN, a signed Form A2 declaring the amount and purpose, the correct RBI purpose code for travel services, and the DMC's or hotel's invoice or contract backing the payment. Depending on the amount and nature of the payment, your bank may also require a CA-issued 15CA (and sometimes 15CB) certificate before releasing the funds.

What's the purpose code for a tour operator's remittance?

Ask your bank's forex desk for the purpose code they use for travel and tourism-related service imports rather than a generic "other services" code. The exact code label can vary slightly by bank, so get it confirmed once and reuse it consistently for every remittance to keep your transaction history clean.

How can I pay a foreign DMC from India without an IATA or MoT accreditation?

Accreditation status doesn't affect your ability to remit money abroad. Any registered business, proprietorship, partnership or company, with a GST registration and a current account can remit through the FEMA current-account route described above. Accreditation affects things like airline ticketing access, not outward remittance eligibility.

The short version

• Your personal LRS quota is for you as an individual, capped at USD 250,000 a year; it explicitly excludes firms, companies, HUFs and trusts, so it's the wrong route for a business supplier payment.
• Pay foreign DMCs and hotels through your business's current account as a FEMA current account transaction, backed by PAN, a signed Form A2, the correct purpose code, and the supplier's invoice.
• The 20% TCS on remittances above ₹10 lakh is an LRS rule for individuals; it doesn't apply to your business's current-account supplier payment, which is a different mechanism from the TCS you collect from clients on outbound packages.
• Some remittances need a CA-signed 15CA/15CB before the bank will release funds; confirm your specific category with your CA once and reuse that checklist every time.
• Bank forex desks and RBI-authorised AD-II fintech platforms both work for the wire; business cards or DMC-side card payments work fine for smaller or one-off amounts.
• Vet any new overseas supplier before the first meaningful wire, regardless of which route or paperwork you use to pay them.
• Rules and thresholds here move; this reflects the position as of July 2026, so confirm current rates and forms with your CA or bank before a large remittance.