In a significant policy breakthrough for India’s outbound travel ecosystem, the Outbound Tour Operators Association of India (OTOAI), in close collaboration with Ernst & Young (EY), announces the successful securing of a substantial reduction in Tax Collected at Source (TCS) on overseas tour programme packages under the Finance Bill 2026.
As per the revised clarification table, Sl. No. 8 of the relevant sub-section, which earlier mandated TCS at rates of 5% and 20% on the sale of overseas tour programme packages—including expenses towards travel, hotel stay, boarding, lodging, or any related expenditure—has now been rationalised to a flat 2% TCS, without any threshold limit.
This marks one of the most meaningful tax relief measures the outbound tourism sector has witnessed in recent years.
Under the previous regime, outbound tour packages attracted 5% TCS on payments up to INR 10 lakh and 20% on amounts exceeding INR 10 lakh, creating significant financial and operational challenges for travellers and domestic outbound tour operators. The revised structure will substantially ease this burden and improve affordability for Indian travellers.
OTOAI extends its sincere appreciation to the Government of India, particularly the Ministry of Finance and the Ministry of Tourism, and conveys special thanks to Shri Gajendra Singh Shekhawat, Hon’ble Minister of Tourism, for acknowledging the industry’s concerns and taking proactive steps to enhance the competitiveness and growth of India’s outbound tourism sector.
This milestone follows nearly two years of sustained engagement with policymakers, during which EY, working closely with OTOAI, provided strategic inputs and constructive dialogue to reinforce the industry’s submissions and advocate for a more balanced and equitable tax framework.
Importantly, this revision addresses the long-standing concern of an uneven playing field between domestic outbound tour operators and overseas entities, helping prevent the shift of business from Indian operators to overseas tour operators, thereby strengthening the domestic outbound tourism industry.
This development marks a crucial step forward for the outbound tourism sector—one that not only eases immediate financial pressure but also sets a positive tone for sustainable growth. With a more balanced and traveller-friendly tax framework now in place, India’s outbound travel landscape is poised to expand with renewed confidence and momentum.
