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TAAI appeals to FM for abolishing TCS ahead of its implementation on October 1

As the new Tax Collection at Source (TCS) on foreign remittances is set to become applicable from October 1, 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, Jyoti Mayal, President, TAAI, 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.

According to her, Indian tour companies are becoming less competitive when compared to operators outside India, who not only save on the 5 per cent GST but also the TCS, which ranges from 5 to 20 per cent, and they are not required to register in India.

TAAI in its letter also stated that the Reserve Bank of India and banks are not equipped to maintain and monitor the limits of INR 7 lakh per traveller, and there is no mechanism to track the same.

There is still ambiguity on the payments made for such packages through credit cards overseas, it said.

The risks associated with these overseas companies could also have a significant impact on passengers in general. The quality and reliability of these companies may not meet the desired standards, leading to potential service delivery issues or even instances of fraud, Mayal emphasised.

She lastly urged the finance minister to abolish the TCS as a whole on overseas tour packages or at least defer it until the next financial year so that a detailed discussion can be carried on the subject.

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