Indian Association of Travel & Tourism Experts (IATTE) has once again requested the Indian government to withdraw the proposed collection of five percent tax at source (TCS) from travellers buying an outbound tour package.
Earlier, IATTE through written communication addressed to the Ministry of Tourism and Ministry of Finance reminded the government of how TCS will be detrimental to business prospects of outbound travel agents besides increasing compliance cost of local companies.
Industry stakeholders fear that TCS of 5% (10% on those without PAN) will result in tourism products sold from India expensive, thus, resulting in advantage to travel companies based outside of India.
“TCS will result in travellers directly booking with foreign tour operators. It will also add to the reporting and cost burden on us. The Covid-19 pandemic has hit all of us hard with not just demand nose-diving critically but also threatening our very existence. There is no cash inflow expected for a majority of enterprises in the foreseeable future. Implementation of TCS will act as a bottleneck in the recovery of business of outbound travel agents,” said Naveen Manchanda, President, IATTE.
As per industry estimates there are more than 60, 000 travel agencies in India which employee about two million individuals.
“Unfortunately, a whole lot of people employed in the industry are now jobless and many entities are on the verge of bankruptcy or closure. TCS will result in many travel agencies which are already reeling under pressure caused by the Covid-19 pandemic to close their operations,” said Veena Robinson, General Secretary, IATTE.
TCS on outbound travel packages was supposed to be implemented on April 1, 2020, but was deferred on request from the industry
“Tourism has helped to brand India as a sought-after market for businesses and created a vibrant and positive image of our incredible country in foreign shores. Indians who travel overseas are globally one of the highest spenders! No wonder every international destination wants to market their country in India. A strong outbound tourism market is also important for the growth of Indian inbound market,” added Manchanda.