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tcs: Travel cos urge government to review move to raise TCS on overseas tour packages

Tour operators and travel agents have urged the finance ministry and the Central Board of Direct Taxes (CBDT) to review the decision to increase tax collection at source (TCS) on overseas tour packages to 20% from 5% from July 1, arguing that the higher levy will hurt the domestic industry.

“We have sent a request to CBDT on March 8 asking them to reconsider this proposal. Besides tour operators, it’s going to be a losing proposition for the government as people will take the other route and will book through overseas operators directly,” said Riaz Munshi, president, Outbound Tour Operators Association of India (OTOAI).

“Foreign companies are not charging GST (goods and services tax) on bookings. There are foreign companies that will take advantage of this move and will allow customers to pay on arrival, and there will be no revenue generation for the government,” he said.

In its representation to the CBDT, the OTOAI said the increase in the TCS rate will result in an increased upfront cash outflow for travellers.

“An increase in the TCS from 5% to 20% seems arbitrary when the maximum rate of TCS in all other provisions of the Income Tax Act is 5%,” said the OTOAI letter.

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