In a significant development for India’s outbound tourism industry, the Outbound Tour Operators Association of India (OTOAI), in close collaboration with Ernst & Young (EY), has successfully secured a substantial reduction in Tax Collected at Source (TCS) on overseas tour programme packages under the Finance Bill 2026. The move is being seen as one of the most impactful policy interventions for the sector in recent years.
As per the revised clarification table under the Finance Bill, Sl. No. 8 of the relevant sub-section, which earlier mandated TCS at rates of 5 per cent and 20 per cent on the sale of overseas tour programme packages, has now been rationalised to a flat 2 per cent TCS, with no threshold limit. The earlier provision applied to overseas tour packages including expenses related to travel, hotel stays, boarding, lodging, and other associated costs.
Under the previous regime, outbound tour packages attracted 5 per cent TCS on payments up to INR 10 lakh, while amounts exceeding INR 10 lakh were subject to a steep 20 per cent TCS, leading to significant financial strain for travellers and operational challenges for Indian outbound tour operators. The revised structure is expected to considerably ease this burden, improve affordability, and restore confidence among Indian travellers planning overseas holidays.
OTOAI has expressed its sincere appreciation to the Government of India, particularly the Ministry of Finance and the Ministry of Tourism, for addressing long-standing industry concerns. The association has also conveyed special thanks to Shri Gajendra Singh Shekhawat, Hon’ble Minister of Tourism, for acknowledging the challenges faced by the outbound tourism sector and taking proactive steps to enhance its competitiveness and growth.
This policy outcome follows nearly two years of sustained engagement with policymakers, including detailed consultations with officials from the Ministry of Finance. During this period, EY, working closely with OTOAI, provided strategic inputs, data-backed recommendations, and constructive dialogue to strengthen the industry’s submissions and advocate for a more balanced and equitable tax framework.
Importantly, the revision addresses a long-standing concern around the uneven playing field between Indian outbound tour operators and overseas entities. By rationalising TCS rates, the move is expected to curb the shift of business to foreign tour operators and reinforce the position of domestic players within the outbound tourism ecosystem.
Industry stakeholders view this development as a crucial step forward—one that not only alleviates immediate financial pressure but also lays the foundation for sustainable long-term growth. With a more balanced, transparent, and traveller-friendly tax regime now in place, India’s outbound travel sector is poised to expand with renewed confidence and momentum.