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TAFI WR’s session on TCS dispels doubts; members looking at further dialogue with government

The Western Region Chapter of Travel Agents Federation of India (TAFI) organised an educative session on TCS (Tax Collected at Source) in Mumbai recently. The aim was to dispel doubts about the new law for outbound travel. Rajesh P. Shah, Partner, Jayantilal Thakkar & Co, who was one of the speakers at the event told TravelBiz Monitor that through TCS, the government wants to collect information about the people who travel abroad. “The government wants the travel agents who sell outbound tour packages to be part of the information gathering process. And 5% TCS of what is being collected will be credited to those people and they can claim the credit like normal advanced tax of TDS,” pointed out Shah.

Citing an example, he said that there was hue and cry when the government introduced TCS in the car segment but people accepted it when they realised the purpose of introduction. “The same is the case with tour packages. People are initially reluctant, but they will accept it after some time,” he said.

Shah also said that the government is not targeting the travel industry or travel agents. “The government is targeting people who are not paying proper income tax but travelling abroad and leading a luxurious life. The statistics (pre-Covid) show that the number of people travelling abroad have gone up substantially, but the same is not reflected in the income tax return. So, the government intends to capture that data. We are complicating the law through multiple interpretations,” explained Shah.

Ajay Prakash, President, TAFI, said that the TCS has impacted the tourism business as it increased their compliance burden. “It is important to know what the law says and what would be the consequences of not complying with the law,” he said.

Are you opposing the government’s move? Replied Prakash, “All associations have opposed it earlier, so has TAFI. Because, we have become tax collectors and reporters for the government. That too at a time when all our margins are under pressure due to Covid. This is an unjustified burden on us.”

Prakash suggested two things to the government if the purpose of the introduction of TCS is to collect information only. First, there has to be a level-playing field which means portals registered overseas should also be mandated to collect TCS. Second, to reduce it to 1% from 5%. “What is the point of keeping it 5% if the intention is to collect information only,” asked Prakash.

Jitul Mehta, Chairman, Western Region, TAFI, said that there is absolutely no clarity on TCS among the members. “I am worried about TCS as it is related to outward remittance of foreign exchanges. Hence, it is imperative to know details about the law,” said Mehta. He also said that many such educational sessions are in the pipeline but didn’t divulge detail.

The event witnessed a good number of members who asked a barrage of questions, hence making it truly interactive. “The issues which have been raised and we do not have answers, will take up with the Ministry and seek clarification for the same,” said Prakash.

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