20% TCS on overseas packages dampens spirit of travel operators

Visakhapatnam Indian tour operators are in a quandary over the introduction of 20 per cent Tax Collected at Source on foreign tour packages.

While hitting the domestic travel operators adversely, those active in organising high-end overseas trips, for corporates and individuals, cry foul over the government’s decision saying it has so many loopholes. Foreign tour operators can evade payment of TCS on one’s credit-debit card by crossing Rs 7 lakh per annum if it is paid in foreign currency. Some travel operators say the new rule will also not be applicable if someone pays hotel tariff and food and travel charges to the foreign operator on arrival at the overseas destinations.

The new rule says the travel operator will collect TCS from the travellers at the rate of 20 per cent of the total package cost and he can claim refund subject to eligibility at the time of filing his income tax returns on his Permanent Account Number (PAN). However, extra spending at the time of booking, travel industry stakeholders feel, may dampen the spirit of several tourists and corporate executives thereby forcing them to curtail their number of visits or downsizing their travel plans.

“The decision will slowly kill the Indian travel operators, who are now showing signs of recovery after undergoing a lot of trauma due to losses suffered during the prolonged spell of Covid-19. We appeal to the Central Board of Director Taxes and other authorities concerned to review the decision and withdraw it as the travel industry itself is a major revenue-earner and job-provider,” Tours and Travels Association of Andhra (TTAA) president K Vijay Mohan told Bizz Buzz.

The changes incorporated in the Finance Act, 2023 will come into force from July 1. Presently, TCS is charged at five per cent. There is no clarity if it will be applicable if booking is done through an international firm located abroad or an online portal run by foreign entrepreneurs.

As overseas online portals have the advantage of non-applicability of GST levied by the Government of India as they do not pay TCS and snatch away businesses due to Indian tour operators and deny employment opportunities in India, Padhi Srinivasa Kumar, a local travel operator bemoaned. He said foreign companies will take advantage of the situation by encouraging payment on arrival thereby denying revenue to the Government of India for bookings done through domestic travel operators.

Foreign tour

• At present, TCS is five per cent

• The changes will come into force from July 1

• GST not applicable on overseas online portals

• Government’s decision has many loopholes

The decision will slowly kill the Indian travel operators, who are now showing signs of recovery after undergoing a lot of trauma due to losses suffered during the prolonged spell of Covid-19. We appeal to the Central Board of Director Taxes and other authorities concerned to review the decision and withdraw it as the travel industry itself is a major revenue-earner and job-provider

- TTAA president K Vijay Mohan told Bizz Buzz