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NEW DELHI: The Indian travel industry has urged the government to roll back the “draconian” TCS on foreign tours that kicks in from October 1, 2023, and instead mandate a standard 2.5% on all foreign spends by individuals who hold a valid PAN Card. The rate can be higher for those who do not produce a PAN card, the Travel Agent Federation of India (TAFI) has said in a letter to Union finance minister Nirmala Sitharaman. “This will create a level playing field, eliminate the bias in favour of overseas tour operators and the travel industry of India will have a fair chance to compete on the global stage,” TAFI president Ajay Prakash has said in his plea to the government.
The almost four decade old TAFI has 12 chapters across India with over 1400 members. “We are grateful that in response to the appeals made by us and other associations earlier this year, you were kind enough to defer the implementation of the TCS regime as proposed in the Finance Bill 2023. However, the impending application of higher TCS from October 1, 2023, has the tourism industry in a turmoil. A rate of 20%, which is to be levied only by tour companies based in India, will have a disastrous impact on the local industry since it will seriously disadvantage Indian tour operators vis-à-vis overseas entities who cannot be compelled to levy a similar tax collected at source or GST, for that matter,” Prakash’s letter to the FM says.
“Tourism was a high point of the G20 Agenda and we were looking forward to a significant spurt in numbers, but this drastic increase in TCS on Overseas Tours will endanger the very survival of many travel agents and tour operators since outbound tours form a large part of their business – and this business is likely to get almost entirely diverted to foreign agents simply because of the huge additional upfront cost of booking with an Indian company. This additional 20%, even though it can be adjusted against the tax liability one year later, will effectively sound the death knell for many Indian travel agents and tour operators. The loss of jobs will run into several lakhs. TCS in any category for any other goods or services is not levied at this exorbitant rate. Why is the tourism industry being singled out for punishment?” it says.
Travel industry says originally TCS on overseas tours was to track those who don’t pay taxes and yet spend money on overseas travel. This, the industry says, could “effectively be achieved by levying a standard 2.5% TCS on all foreign spends across all channels. This would also eliminate the need for complex monitoring systems to track spending across multiple channels and platforms.”
The almost four decade old TAFI has 12 chapters across India with over 1400 members. “We are grateful that in response to the appeals made by us and other associations earlier this year, you were kind enough to defer the implementation of the TCS regime as proposed in the Finance Bill 2023. However, the impending application of higher TCS from October 1, 2023, has the tourism industry in a turmoil. A rate of 20%, which is to be levied only by tour companies based in India, will have a disastrous impact on the local industry since it will seriously disadvantage Indian tour operators vis-à-vis overseas entities who cannot be compelled to levy a similar tax collected at source or GST, for that matter,” Prakash’s letter to the FM says.
“Tourism was a high point of the G20 Agenda and we were looking forward to a significant spurt in numbers, but this drastic increase in TCS on Overseas Tours will endanger the very survival of many travel agents and tour operators since outbound tours form a large part of their business – and this business is likely to get almost entirely diverted to foreign agents simply because of the huge additional upfront cost of booking with an Indian company. This additional 20%, even though it can be adjusted against the tax liability one year later, will effectively sound the death knell for many Indian travel agents and tour operators. The loss of jobs will run into several lakhs. TCS in any category for any other goods or services is not levied at this exorbitant rate. Why is the tourism industry being singled out for punishment?” it says.
Travel industry says originally TCS on overseas tours was to track those who don’t pay taxes and yet spend money on overseas travel. This, the industry says, could “effectively be achieved by levying a standard 2.5% TCS on all foreign spends across all channels. This would also eliminate the need for complex monitoring systems to track spending across multiple channels and platforms.”
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