The Association wants Government to reduce it to 2.5 per cent so that more and more people book their foreign trip through tour operators based in India
The Board of Federation of Associations in Indian Tourism & Hospitality (FAITH) has appealed to the Government to withdraw the increase of TCS on the overseas tour packages from 20 per cent to 5 per cent announced in the Finance Bill 2023. Such a move has put domestic tour operators at a disadvantage as the bookings are moving to foreign tour operators as they are not liable to deduct this charge.
This step of raising the TCS has greatly undermined the business prospects of Indian Tour Operators who were just seeing a revival after reeling long under the impact of the pandemic. According to Nakul Anand, Chairman of FAITH, “This is like a bolt from the blue. This will make our domestic tour operators uncompetitive vis-a-vis the foreign tour operators. They would not just face huge stress but this can potentially lead to business shutdowns and loss of jobs.”
Anand adds, “We understand that the sole objective of introducing TCS on foreign travel is to bring more and more people to the Tax net. But this purpose would not be served as the travellers would simply start booking with foreign tour operators. Also post digitisation the lines between inbound, domestic and outbound tour operators have blurred. With inbound still not recovered, losing business in outbound to global players will hurt Indian travel MSME companies who make up for more than 95 per cent of the industry.”
The FAITH Board has pleaded to the Government not just roll back the TCS rate to 5 per cent but rather reduce it to 2.5 per cent so that more and more people book their foreign trip through tour operators based in India and the avowed objective of bringing more people into the tax net is also met.