TAAI has filed a last-minute request to the government, pleading with them to reverse the decision or postpone its implementation until the following fiscal year to allow negotiations on international trip packages. The new Tax Collection at Source (TCS) on foreign remittances is scheduled to become effective on October 1st. The TCS on international transfers made through the Liberalized Remittance Scheme (LRS) has been increased by the government from 5% to 20%. This will apply to overseas travel, remittances, including sending money abroad.
The Travel Agents Association of India (TAAI) wrote to Finance Minister Nirmala Sitharaman pleading for the TCS to be eliminated on international travel packages, citing the potential loss of business and difficulty in its implementation.
Jyoti Mayal, President of TAAI, wrote to the FM stating that the TCS is a significant problem for the travel industry and would cause a significant shift in business to foreign tour operators.
Furthermore, she emphasized that the implementation of TCS is a double blow given how negatively the GST already affects the livelihood of Indian travel companies that operate outbound excursions.
She claims that as opposed to operators outside of India, who not only avoid paying the TCS, which ranges from 5 to 20 percent, and are not needed to register in India, Indian tour businesses are becoming less competitive. The Reserve Bank of India and banks are not equipped to maintain and monitor the limitations of INR 7 lakh per traveler, and there is no system in place to track the same, according to the TAAI, which also highlighted this in its letter.
It claimed that there was still uncertainty regarding payments made for such bundles using credit cards abroad. The dangers posed by these international businesses may potentially have a big effect on travelers in general. Mayal emphasized that these businesses’ dependability and quality might not be up to par, which could cause problems with service delivery or even cases of fraud.
She concluded by pleading with the finance minister to either completely eliminate or at least postpone the TCS on international travel packages until the following fiscal year, allowing for a thorough consideration of the issue.
Source- Hindustan times