Travel Agents Federation of India writes a letter to the Honourable Finance Minister, Smt. Nirmala Sitharaman, regarding TCS with the following content –
“Greetings from the Travel Agents Federation of India! We are a 37-year-old association of travel professionals with 12 Chapters across the country and over 1400 members pan-India. Our mission is to lead and serve the Indian Travel & Tourism industry.
We are grateful that in response to the appeals made by us and other associations earlier this year, you were kind enough to defer the implementation of the TCS regime as proposed in the Finance Bill 2023.
However, the impending application of higher TCS from 01 October has again put the tourism industry in turmoil. A rate of 20%, which is to be levied only by tour companies based in India will have a disastrous impact on the local industry since it will seriously disadvantage Indian tour operators vis-à-vis overseas entities who cannot be compelled to levy a similar tax collected at source or GST, for that matter.
Tourism was a high point of the G20 agenda and we were looking forward to a significant spurt in numbers, but this drastic increase in TCS on overseas tours will endanger the very survival of many travel agents and tour operators since outbound tours form a large part of their business – and this business is likely to get almost entirely diverted to foreign agents simply because of the huge additional upfront cost of booking with an Indian company.
This additional 20%, even though it can be adjusted against the tax liability one year later, will effectively sound the death knell for many Indian travel agents and tour operators. The loss of jobs will run into millions! It may be noted that the TCS in any category for any other goods or services is not levied at this exorbitant rate. Why is the tourism industry being singled out for punishment?
It is our understanding that originally TCS on overseas tours was envisaged to track those who don’t pay taxes and yet spend money on overseas travel. This could effectively be achieved by levying a standard 2.5% TCS on all foreign spends across all channels. This would also eliminate the need for complex monitoring systems to track spending across multiple channels and platforms.
Madam, the entire Indian travel industry implores you to roll back the draconian TCS on foreign tours and instead mandate a standard 2.5% on all foreign spends by individuals who hold a valid PAN Card. The rate can be higher for those who do not produce a PAN card. This will create a level playing field, eliminate the bias in favour of overseas tour operators and the travel industry of India will have a fair chance to compete on the global stage.”