Synopsis
The Travel Agents Association of India (TAAI) has appealed to the Indian government to abolish or defer the implementation of the new Tax Collection at Source (TCS) on foreign remittances until the next fiscal year. The TCS, which has been raised from 5% to 20% on foreign remittances under the Liberalised Remittance Scheme, will be applicable to international travel and other remittances.
With the upcoming implementation of the new Tax Collection at Source (TCS) on foreign remittances scheduled for October 1, the Travel Agents Association of India (TAAI) has made an eleventh-hour appeal to the government. They are urging the authorities to either revoke the decision entirely or postpone its enactment until the next fiscal year.
As the new Tax Collection at Source (TCS) on foreign remittances is set to become applicable from October 1, travel agents’ body TAAI has made a last-minute plea to the government, urging them to abolish the decision or defer its implementation until the next fiscal year to allow discussions on overseas tour packages.
The government has raised the TCS on foreign remittances under the Liberalised Remittance Scheme (LRS) from 5 per cent to 20 per cent. This will be applicable to international travel, sending money abroad and other remittances.
Travel Agents Association of India (TAAI) has written to Finance Minister Nirmala Sitharaman, appealing to abolish TCS on overseas tour packages, highlighting the business loss and complexity of its implementation.
In a letter to the FM, TAAI President Jyoti Mayal said the TCS is a huge challenge for the travel fraternity and would lead to a lot of business being diverted to overseas tour operators.
Further, she pointed out that with GST already affecting the livelihood of Indian tour operators engaged in outbound tours, the introduction of TCS presents a double blow.
As the new Tax Collection at Source (TCS) on foreign remittances is set to become applicable from October 1, travel agents’ body TAAI has made a last-minute plea to the government, urging them to abolish the decision or defer its implementation until the next fiscal year to allow discussions on overseas tour packages.
The government has raised the TCS on foreign remittances under the Liberalised Remittance Scheme (LRS) from 5 per cent to 20 per cent. This will be applicable to international travel, sending money abroad and other remittances.
Travel Agents Association of India (TAAI) has written to Finance Minister Nirmala Sitharaman, appealing to abolish TCS on overseas tour packages, highlighting the business loss and complexity of its implementation.
In a letter to the FM, TAAI President Jyoti Mayal said the TCS is a huge challenge for the travel fraternity and would lead to a lot of business being diverted to overseas tour operators.
Further, she pointed out that with GST already affecting the livelihood of Indian tour operators engaged in outbound tours, the introduction of TCS presents a double blow.
Ajay Prakash, President, TAFI, on behalf of his association, has written to Nirmala Sitharaman, Finance Minister, to defer the implementation of the TCS regime as proposed in the Finance Bill 2023. He mentioned, “The impending application of higher TCS from October 1 has again put the tourism industry in turmoil. A rate of 20 per cent, 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.”
The letter also noted that tourism was a high point of the G20 agenda, and the industry was looking forward to a significant spurt in numbers. However, the 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.
Ajay also questioned why the tourism industry is being singled out for punishment. He elaborated that the additional 20 per cent, 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 millions! It may be noted that the TCS in any category for any other goods or services is not levied at this exorbitant rate.
“It is our understanding that originally TCS on overseas tours was envisaged to track those who don’t pay taxes and yet spend money on overseas travel. This could effectively be achieved by levying a standard 2.5 percent TCS on all foreign spending across all channels. This would also eliminate the need for complex monitoring systems to track spending across multiple channels and platforms,” the letter mentioned.
Further, he requested the Minister, “The entire Indian travel industry implores you to roll back the draconian TCS on foreign tours and instead mandate a standard 2.5 per cent 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. This will create a level playing field, eliminate the bias in favour of overseas tour operators, and give the travel industry of India a fair chance to compete on the global stage.”
TAFI received a response stating that their request had been forwarded to the appropriate department. TAAI, on the other hand, has also been communicating with the Ministry as well as CBDT on the matter regarding the abolishment of TCS for the Overseas Tour Package. Now once again, the association heads have sent a detailed letter to the Finance Minister on the abolishment of TCS. TAAI has also requested a meeting with the ministry on the subject matter of TCS and appealed not to implement the increase in TCS, which shall be effective on October 1, 2023, and for the same to be deferred.
