TAAI says that this tax puts an unfair burden on Indian travel agents, making them less competitive when compared to their foreign counterparts
The executive committee of the Travel Agents Association of India (TAAI) has written a last-minute plea to Union Finance Minister Nirmala Sitharaman calling for abolition of Tax Collected at Source (TCS) which will kick in from October 1.
In the letter, TAAI, which is India’s largest and oldest travel industry body, has referred to its previous appeals to Sitharaman and the Finance Ministry about the serious impact that TCS would have on the Indian travel industry.
It says that the subject of TCS was differed by the ministry in the month of June and would be made effective from October 1, with 20 pc tax on overseas tour packages to be levied by the remitter.
It adds that as per its understanding and as per relevant government notices, a TCS of 5 pc would be levied for tour packages of up to INR 700,000 and for any incremental amount thereon of the package cost, TCS at a rate of 20 pc would be applicable.
TAAI says that this tax puts an unfair burden on Indian travel agents, making them less competitive when compared to their foreign counterparts.
“The challenges faced by TCS are huge and a lot of business is getting diverted to overseas tour operators operating out of India which is directly impacting the revenues to the exchequer of India on Income Tax by travel agents and tour operators, GST as well as hitting on the livelihood of Indian tour operator companies doing business of outbound tours. Due to this the Indian tour companies have become less competent as compared to operators working outside of India who save on 5 pc GST and the TCS (5-20 pc) and have no registration in India,’’ says TAAI in the letter.
TAAI says that there is also the risk of these overseas companies shall also impact the passengers at large as the quality and sustainability of these companies when services are not delivered as desired by the passenger or frauds may occur.
“Our previous representations in the matter of TCS have requested your Ministry for abolishment of TCS as a whole on overseas tour packages. Currently the Reserve Bank of India or the banks are not equipped to maintain and monitor the limits of INR 700,000 per traveller and there is no mechanism to track the same,’’ says TAAI.
It adds that there was still ambiguity on the payments made for such packages through credit cards overseas.
TAAI has urged the government to have a mechanism and system in place so that the monitoring can be effective without loopholes and be such that “shall benefit the citizens of our country, the tour operators of our country as well as bring revenue to the Government of India”.
“We once again request your good offices to defer the TCS implementation and abolish the same until further notice and have a consultative dialogue with us at TAAI which is the largest and nodal association of travel agents and tour operators in India since 1951. This should certainly be differed till the next financial year thus giving us an opportunity to discuss & deliberate,’’ writes TAAI.
