With the impending introduction of the new Tax Collection at Source (TCS) on foreign remittances scheduled for October 1, the Travel Agents Association of India (TAAI) has issued a last-minute request to the government. They are urging authorities either to revoke this decision or postpone its enforcement until the next fiscal year, allowing for discussions on overseas tour packages.
The government has increased the Tax collected at Source (TCS) rate for foreign remittances, specifically under the Liberalised Remittance Scheme (LRS), from 5 percent to 20 percent. This modification will be applicable to a range of international transactions, including overseas travel, international money transfers, and other remittances.
The Travel Agents Association of India (TAAI) has made an appeal to Finance Minister Nirmala Sitharaman, in a written letter, for the elimination of TCS on overseas tour packages. They have highlighted the adverse business effects and the intricacy involved in its implementation.
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In a letter to the Finance Minister, TAAI President Jyoti Mayal has discussed concerns that TCS is potentially diverting a substantial portion of the business to overseas tour operators, which poses a significant challenge to the travel industry.
Furthermore, she has highlighted that the introduction of Tax collected at Source (TCS) compounds the challenges faced by Indian tour operators engaged in outbound tours, especially in light of the existing impact of GST.
According to Mayal, Indian tour companies are becoming less competitive in comparison to international operators, who not only save from the 5 percent GST but also the TCS, with rates varying from 5 to 20 percent, and they are not GST-registered in India.
The association in its letter has also explained that the Reserve Bank of India and banks are ill-equipped to manage and monitor the Rs. 7 lakh per traveler limits, with no effective tracking mechanism in place.
The letter also pointed out that ambiguity still surrounds payments made for such packages using credit cards overseas.
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Mayal has stressed that the risks associated with these foreign companies could have a substantial impact on passengers at large. There are concerns about the quality, reliability, and potential service delivery issues or even instances of fraud.
She has made a final appeal to the Finance Minister, either to completely eliminate TCS on overseas tour packages or, at the very least, postpone its implementation until the next fiscal year, thereby allowing for detailed discussions on the matter.
