IATO expresses its sincere gratitude to the Government for withdrawing completely 5 percent Tax Collection At Source (TCS) charged on the sale of overseas tour packages to foreign tour operators. The same was earlier withdrawn only for individual foreign tourists but now on IATO’s representation, Govt. has announced the removal of tax, both on individual foreign tourists as well as foreign tour operators (FTO’s). The removal would make the tour packages offered by Indian tour operators to foreigners a bit cheaper and would help provide some succor to the pandemic-ravaged sector.
A lot of foreigners book overseas tour packages for neighboring countries like Bhutan, Nepal, and the Maldives through Indian Tour Operators. But since there was a levy, they preferred booking the tours directly with tour operators in those countries as there was no such charge there.
According to Mr. Rajiv Mehra, President IATO, “The impact of this notification is that both foreign individuals and FTOs (buyers) buying overseas tour packages from the Indian Tour Operators will be exempt from TCS provisions. It is not necessary that foreign tourists should visit India for an onward journey to the neighboring country. Secondly, the FTO / Corporate entity established in a foreign country and not maintaining any permanent establishment/branch in India would also be exempted from TCS provisions.”
Mr. Mehra adds further, “Indian tour operators were losing a lot of clients because of this tax, besides the govt. was losing precious foreign exchange as the entire money was going to other countries. We represented the Finance Ministry on this and they found merit in our plea and thereby announced the withdrawal. We express our gratitude to the Finance Ministry and Tourism Ministry for this.”