The travel industry players have expressed their appreciation for the government’s decision to defer Tax Collection at Source (TCS) on overseas tour packages until September 30, 2023, and to withdraw the increase of TCS percentage from 5 per cent to 20 per cent on amounts up to ₹7 lakh per annum. While they consider this move as a partial relief for travel agents in maintaining their competitiveness against global players, they also see room for further improvement.

Jyoti Mayal, Vice-Chairperson of FAITH, acknowledges that although the partial relief is welcomed, there is still a need for additional measures to support travel agents.

Mayal suggests that reducing the TCS percentage to 2.5 per cent would be beneficial for the government’s objective of expanding the tax net. By reducing the TCS on overseas tour packages, more individuals would be inclined to book through Indian tour operators, registered in India, rather than directly with foreign or online operators who are not liable to collect tax at source.

Mahesh Iyer, Executive Director & CEO of Thomas Cook (India) Limited, praises the clarification provided by the government regarding the threshold of ₹7 lakh per individual per financial year. This clarification applies to all modes of payment, including prepaid forex cards, and brings clarity and consistency to transactions in the travel industry. Iyer believes this announcement will greatly assist the travel industry, which is still recovering from the impact of the global pandemic.

Rajiv Mehra, President of IATO, highlights the longstanding demand of reducing the TCS percentage to 2.5 per cent, emphasising that this would encourage more people to book through Indian tour operators and contribute to the government’s aim of broadening the tax base.

An industry player, speaking anonymously, acknowledged the respite provided by the extended timeline until October. This additional time allows the industry to establish necessary processes, particularly for various B2B transactions involving wholesale resellers and cruise companies. The player emphasises the need to streamline the TCS and notes that the revised rates now apply uniformly across different payment modes, bringing about a level playing field for the industry.

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