In a statement, the government announced that it was withdrawing the 5 per cent TCS applicable on tour packages bought for overseas citizens or Non-Residential Indians (NRIs) visiting the home country
PRAVASISAMWAD.COM
Indian tour operators and travel agents have at last got a long-standing demand fulfilled. In a major relief for the Indian tour trade, the government has partially fulfilled the demand of the travel trade to provide relief with Tax at Source (TCS) applicable on tour packages. In a statement, the government announced that it was withdrawing the 5 per cent TCS applicable on tour packages bought for overseas citizens or Non-Residential Indians (NRIs) visiting the home country.
Indian domestic tour operators will not be required to collect tax on the sale of overseas tour packages to non-resident individuals travelling to India effective April 1. The order issued by the Central Board of Direct Taxes (CBDT) has relaxed the provisions on TCS under Section 206C(1G) of the Income Tax Act 1961.
“The pandemic has created havoc for the travel trade for nearly two years and the with competition faced internationally, due to GST: there was a huge gap between what overseas agents charge and what our members – tour operators and travel agents were required to charge to overseas customers and domestic travellers. So as to increase the business and bypass the competition, I would request the government to announce similar relief measures to the industry specially pertaining to GST.
— Jyoti Mayal, President, TAAI
In the notification issued on March 31, CBDT, which falls under the Department of Revenue of the Ministry of Finance, the Government of India, said that it took a decision after the government received representations from domestic tour operators who were “facing difficulties in collection of tax from non-resident individuals visiting India, who were booking overseas tour packages from such domestic tour operators. ”Since such persons may not have a PAN, tax is required to be collected at higher rates. Further such, non-residents may find it difficult to furnish their ITR and claim refunds,” the notification read.
The relaxation will be extended to a buyer who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act and who is visiting India. Additional 5 per cent TCS applicable on overseas tour packages from October 1, the new law imposed additional compliance responsibility on travel agents, which increased the cost of doing business, especially for the small and medium travel agents, which form the bulk of the industry.
Meanwhile, TAAI has welcomed the government’s decision to withdraw TCS on overseas tour packages. Jyoti Mayal, President, TAAI said that the move was going to provide some relief to tour operators and travel agents, who had suffered due to Covid-19 pandemic and lost a major share of business. She thanked the government for action on the feedback given by the travel trade on the issued faced by the industry on the road to recovery. “The pandemic has created havoc for the travel trade for nearly two years and the with competition faced internationally, due to GST: there was a huge gap between what overseas agents charge and what our members – tour operators and travel agents were required to charge to overseas customers and domestic travellers. So as to increase the business and bypass the competition, I would request the government to announce similar relief measures to the industry specially pertaining to GST,” Mayal said.
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