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Finance Minister addresses the issue of bias on account of TCS

Speaking in the Lok Sabha today, the Finance Minister  stated, “It has been represented that payments for foreign tours through credit cards are not being captured under the Liberalised Remittance Scheme (LRS) & they escape tax collection at source. The RBI is being requested to look into this with a view to bring credit card payments for foreign tours within the ambit of LRS and tax collection at source thereon.”

Commenting on the statement, Ajay Prakash, President, TAFI, said, “At least we will have a more level playing field now. We appreciate that the Government has addressed one of our major concerns. We had met the Finance Secretary, Dr. T.V. Somanathan on 14 March and made a presentation on the implications of the hike in the rate of TCS. We had requested for a rollback, or at least a reasonable threshold for exemption from TCS. Sadly, neither of those requests has found favour with the Ministry. But we are glad that the FM has heeded our request to create a level playing field and eliminate the negative bias which would have lured overseas travellers away from Indian agents.

We had explained that the Indian travel agent/tour operator would be at a huge disadvantage vis-à-vis foreign entities who were under no obligation to collect TCS; Indian travellers would simply book packages through a foreign agent or website and could make payment, either through a credit card or pay cash on arrival. While the ‘pay at hotel’ challenge persists, the tour package, at least for law abiding citizens, would now cost the same whether booked through an Indian or a foreign agent.”

In conclusion Prakash said, “We once again entreat the Hon’ble Finance Minister to consider a reduction in the TCS, or to establish a minimum threshold, so that young Indians can travel the world and discover that it is indeed Vasudhaiva Kutumbakam.”

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