OTOAI pins hopes on deferment of TCS amendments from July 1, ET TravelWorld News, ET TravelWorld


OTOAI pins hopes on deferment of TCS amendments from July 1, ET TravelWorld News, ET TravelWorld
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The Outbound Tour Operators Association of India (OTOAI) has expressed optimism that the government will defer or bring down the new TCS Amendments which will come into force from July 1. The Ministry of Finance had announced multiple amendments to the Tax Collected at Source (TCS) norms including revision of the rates on overseas tour packages and remittance.

Currently, 5 per cent TCS is applicable on overseas tour packages, which is set to go up to 20 per cent from the start of next month.

As per the TCS amendments, the government wants to widen the tax base, prevent tax evasion, and ensure the smooth collection of taxes. Simply put, it shifts the responsibility of tax collection from the government to the person making the payment.

Taxpayers would be able to claim the 20 per cent TCS back at the time of filing income tax returns but that means blocking a certain amount of the trip for a considerable amount of time until one gets refund in their account.

OTOAI pins hopes on a more clarity from the government hoping that the application of TCS will be deferred in interest of country’s outbound tour operators. In a statement, OTOAI said that it continues to advocate for clarity and transparency in these matters and is keen to work with relevant authorities to ensure the best outcomes for India’s outbound tourism industry.

“Given the disruptions and confusion these changes have caused, we are hopeful of a deferment of the TCS. Such a move would significantly help in easing the financial burden on travellers. OTOAI for the last 4 months, has reached out multiple times to the Finance Ministry and concerned officials regarding bringing down the TCS. The fact that it might not be applicable from the said date of July 1 is an encouraging move and rewarding to the association’s efforts in the past,” said Riaz Munshi, President, OTOAI.

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With the new TCS ruling, tour operators will be required to collect 20 per cent TCS and the same will be added to the cost of the overseas tour package, making the trip costlier for the travellers. The standalone cost of the tour package remains the same but the overall cost for you will increase, thanks to TCS levied at 20 per cent. The same will be applicable for the trips booked via Online Travel Agencies (OTAs). However, if the foreign tour package is booked via a foreign tour operator or foreign travel agency and payment is done via credit card upto an amount of INR 7 lakh, then TCS won’t be applicable. Likewise, if several components of the foreign travel such as hotels, flights and sightseeing are booked separately, then also TCS won’t be applicable.

This loophole in the ruling and the lack of clarity on the norms from Ministry of Finance has become the main bone of contention for Indian travel trade and tour operators. Various associations and agencies have trying to seek clarity on rules and requested the government to defer the TCS ruling till then.

  • Published On Jun 26, 2023 at 04:38 PM IST

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