Indian Tour Operators Breathe Sigh of Relief

India tour operators set up task force to deal with COVID-19


The union government, in particular the Finance Ministry, withdrew an increase of Tax Collection at Source (TCS) on overseas tour packages which will remain in effect until September 30, 2023. In addition, the TCS percentage increase from 5% to 20% on amounts up to Rs 7 lakh per annum has also been withdrawn.

IATO also thanked the Minister of Finance and Secretary Revenue for considering non-applicability of TCS on an amount of Rs.7 lakh per person per annum on overseas tour packages. While appreciating the government’s decision, Mr. Rajiv Mehra, President of IATO, said:

“Though we are happy with this roll back, our long-standing demand is that the TCS should be reduced to 2.5%, as the main objective of the government is to bring more into the tax net.”

“And if the government reduces the TCS percentage on overseas tour packages, higher number of people will book through the Indian Tour Operators who are registered in India instead of booking tours directly with the foreign tour operators or booking online tour operators who are not registered in India and are not liable to collect tax at source.”

IATO also advocates that the international credit card should not be included in the Liberalized Remittance Scheme (LRS) that was being followed before May 16, 2023, should continue. The new taxation regime would put the onus of collection of tax on the tour operators for which tour operators neither have the bandwidth or the resources required for implementing it. Added Mr. Mehra, “[The] tax regime should foster [the] ease of doing business, while the new regime would work cross purpose to it. We would want the government to reconsider this aspect as well.”

IATO is the apex body of tour operators in the country with more than 1,700 members.

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