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Industry Demands a Roll Back of TCS on Outbound Bookings

announced Tax Collected at Source (TCS) on the bookings made for the overseas travel. “We are requesting the Finance Ministry for immediate deferment of TCS tax and thereafter consider a full roll back. We sincerely hope that the government will listen to industry’s Mann Ki Baat,” industry Experts opined.

According to them, Tax Collected at Source (TCS) imposed by the Government of India in this budget threatens to finish the Indian travel industry. TCS is a 5 per cent imposed on payments made by passengers for foreign travel done via Indian travel agencies, both offline and online.

They opine that the travel industry in the world is on its last knees due to the Coronavirus phenomena. Airlines/hotels/ travel agencies have seen up to 90 per cent drop in business with IATA announcing that airlines will face the worst year ever in aviation and tourism history.

Massive job losses are taking place with many countries like US even preparing special emergency rescue package for the travel industry. Thailand, Singapore and Hong Kong have already announced tax exemption or financial aid to agents/operators.

The important thing to note is that TCS is not applicable if a passenger books directly with a foreign travel entity.

This will lead to:

a) All foreign bookings diverted to foreign portals or directly with foreign hotel which is contrary to ‘Make in India’ campaign of the government

b) It will facilitate cash transactions as client can block room using his credit card and then directly pay at hotel using cash

c) It will lead to massive tax loss because a travel company pays 5% to 18% GST. A foreign portal pays 0% GST and foreign hotel is exempt from GST.

In Addition, Indian Travel Companies pay Income Tax, shift of bookings by Indian clients to foreign players, will lead to decrease in their incomes and consequently their tax payments.

d) The compliance issue created will be unmanageable since there is no way currently to track the 7 lakhs limit if remitting via LRS, leading to impossible amounts of paper work for small companies. Not to mention increase in cost and time involved for additional compliances for return filings and payments. This increased compliance bur

The Indian outbound travel industry expects a sizeable chunk of business being diverted to to foreign companies who pay no Indian taxes. This is expected to lead to job losses of 2-3Lakhs across India, Experts said.

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