TCS Rollback: Stakeholders Say Partial Relief - India's Top Travel News Source: TravelBiz Monitor

TCS Rollback: Stakeholders Say Partial Relief

By TBM Staff/Mumbai

The Travel Associations have welcomed the government’s decision to defer the proposed increase of tax collected at source (TCS) on overseas tour packages from 5% to 20% on amounts up to INR 7 lakh per annum. However, they termed it as “Partial relief.” Jyoti Mayal, President, TAAI, said that as understood from the government circular, TCS will continue to be 5% up to INR 7 lakh per individual on outbound tours even after October 1, post which 20 per cent will be levied on INR 7 lakh-plus spend.

“If this is so, then even if not a full relief this is a partial relief for our travel agents on retaining their competitiveness somewhat against global players,” said Mayal.

But she added, “I think the government needs to consider the compliance deliverables on the agents. The transaction needs to be under the purview of the traveller and the bank. The agents do not have so much back office support.”

Hailing the government’s decision, Ajay Prakash, President, TAFI, said, “We welcome the move to defer the implementation of 20% TCS until 1st October, 2023.” Prakash termed the decision as breather and said, “It does not take away the fact that the scheme is hastily implemented without fully appreciating the consequences.” “The disparity for the buyers for a high value tour against an Indian agent as compared to overseas tour operators still remains. Any amount over INR 7 lakh would be liable to 20% TCS. This is way too high a figure. When you buy a luxury car there is 1% TCS. Why such treatment for the travel industry?,” asked Prakash. He stated that change in system for revised TCS norms will lead to increase man power cost for the banks and medium and small travel agencies. According to him, “The compliance has becoming increasingly cumbersome and need to be addressed. We talk about ease of doing business, lets’ see it on the ground,” said Prakash.

While appreciating the government’s decision, Rajiv Mehra President IATO said , “Though we are happy with this roll back, our long standing demand is that the TCS should be reduced to 2.5% as the main objective of the government is to bring more into the tax net and if the government reduces the TCS percentage on overseas tour packages, higher number of people will book through the Indian Tour Operators who are registered in India, instead of booking tours directly with the foreign tour operators or booking online tour operators who are not registered in India and are not liable to collect tax at source.”

IATO also advocates that the international credit card should not be included in the LRS i.e. that was being followed before 16th May 2023 should continue. The new taxation regime would put the onus of collection of tax on the tour operators for which tour operators neither have the band with or the resources required for implementing it. “Tax regime should foster ease of doing business while the new regime would work cross purpose to it. We would want the government to reconsider this aspect as well,” added Mehra.

Mahesh Iyer, Executive Director & Chief Executive Officer, Thomas Cook (India) Limited, believes that Government’s announcement to defer the proposed increase in the TCS rate for remittances under LRS to Oct 1, 2023, will help create level playing field. “We appreciate the Government’s initiative that will help create a level playing field – taking on board inputs from relevant stakeholders, including travel and authorized foreign exchange players,” said Iyer. He also added, “As India’s leading foreign exchange provider, we believe this positive announcement also brings in much need clarity with Prepaid Forex cards (the preferred mode of transactions for overseas travellers) now being treated on par with credit/debit cards.”

Vishal Suri, Managing Director, SOTC Travel Limited, said, “We welcome the government’s announcement that highlights no change in the rate of TCS under LRS for all purposes and also for all overseas tour packages across all modes of payment for amounts up to Rs. 7 Lakh per individual per year. Further, more time has been given for implementation to ensure that all systems are in place for revised TCS rates & for the inclusion of credit card payments in LRS till 1stOctober,2023.”
Suri urged the government to bring overseas tour operators within the TCS ambit while implementing the revised credit card guidelines – to ensure a level playing field for India based travel companies.

Read Previous

Airports prioritise cleaner energy transition and cyber threats at ACI World AGA

Read Next

Rhythm ResiTel: Pioneering Hospitality Investments and Experiences in India and Beyond

WordPress Ads

This will close in 0 seconds