TCS hike chokes the trade

The increase in TCS on overseas tours from 5% to 20% has shaken the outbound industry. While many think that the government should have consulted the industry before making such a rule, others feel that it’s been done to promote inbound and prevent Indians from travelling overseas.

Nisha Verma

While presenting the Union Budget 2023-24, Finance Minister Nirmala Sitharaman talked a lot about promoting tourism, which made the industry happy. However, the increase of TCS on overseas travel from 5 per cent to 20 per cent came as a dampener. A disappointed Riaz Munshi, President, OTOAI, said, “We requested the Finance Minister to reduce TCS percentage from 5 per cent. Instead, the government has increased it to 20 per cent, which is going to hamper our business and at the same time, there will be a huge deficiency in government revenue as people would prefer to either book through foreign tour operators or foreign OTAs to save GST and TCS both.”

Manoj Saraf, Managing Director, Gainwell Travel & Leisure, echoed the view, saying, “This is a ridiculous tax imposed without any thought process. This will only lead to more cash transactions and less compliance. It is impossible to pay 20 per cent TCS.”

Rajeev Sabharwal, Chief Executive, Gaurav Travels, and a CA by profession, also feels that it’s an unreasonable rule by the government. “It is not a positive step and will deter a lot of people who do not want to share their PAN cards. This will also force people to either book through OTAs, who do not collect TCS or through cash. The outbound tour industry should oppose such a move and file a representation before the Ministry of Finance,” he said.

Valmiki Harikishan, MD, Valmiki Travel & Tourism Solutions, said that while the Travel, Tourism & Hospitality Industry has been recognised as the biggest game changer but the hike in TCS was a great disappointment. “I can only say RIP international travel because of the TCS hike. FM must relook into the matter and support us till we stabilise from post-pandemic disruption.” He explained, “On foreign tour packages, the TCS rate is 20 per cent, which means when you collect the money from your client on a foreign tour package, you must additionally collect 20 per cent of the package cost as tax collected at source and the person who pays the TCS can claim the TCS as prepaid tax in his/ her income tax return.”

Siraj Ansari, Managing Director, Avion Holidays, claimed, “The most important thing about TCS in present scenario is that after two years of pandemic we are trying to revive our business. We already have liabilities to clear off. However, the government has come forward to unnecessarily penalise us for charging us, which is not at all acceptable. I think this is going to be a big problem for the entire industry. They are only focused on promoting domestic and inbound travel. I believe that the government must act on this and roll it back.”

Madhavan Menon, Chairman & Managing Director, Thomas Cook (India), said, “The TCS hike will significantly increase the upfront cash outflow for end customers. It will drive more of these customers to use alternate channels that are outside the domestic tax net.”

Vishal Suri, Managing Director, SOTC Travel, also said, “In our view, such high rates of taxation are an added liability to outbound travellers and negatively impacts tour operators recovering from the pandemic. We request the Union government to reconsider this proposal.”