In the present scenario, outbound tourism traffic from India stands at a complete dead end in the absence of international commercial flights operating from the country. Given the rising number of COVID cases in India, outbound tourism will take a while before picking up again. In the light of the same, OTOAI ardently requested the concerned governing bodies to not exercise TCS and remove any possibility of it being implemented in the near future. As reported in media, it will be a huge blow to outbound tour operators if any amount sent abroad to buy foreign tour packages attracts a tax-collected-at source (TCS) beginning October 1, 2020.
Realising the catastrophic impact of the same, OTOAI (Outbound Tour Operators of India) has written to the PMO to roll-back the implementation of TCS as implementing TCS will further kill the business of the travel and tour operators. In addition to the PMO, OTOAI has also written to Smt. Nirmala Sitharaman, Union Finance Minister, Government of India; Shri Pramod Chandra Mody, Chairman, Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance and Shri Prahlad Singh Patel, Tourism Minister, Government of India. OTOAI Team had approached the Ministry of Tourism and PMO in February 2020 as well, soon after TCS was announced and was able to convince the authorities to hold back its implementation by six months.
As explained in their letter to the PMO, with the said TCS being levied on travellers, by travel agents and tour operators, on sale of tour packages, when travelling overseas, it will cause the following issues –
- Indian tour operators will be put at a disadvantageous position vis-à-vis foreign portals selling packages online, International Online Travel Companies/ Booking Engines/ Foreign Tour Operators, with a base outside India and more. They will go ahead and book tour packages directly for Indian travellers without collecting any GST or taxes.
- Travel Agents / Tour Operators currently collect PAN and Passport details of each and every traveller taking an international holiday and submit it to the banks as per the norms set by RBI, while remitting the funds to global hotels, associate travel agencies, ground handlers, etc. In case of loss of bookings, this information will not be available.
- The outbound tour operators are already collecting GST at 5 per cent from the traveller and the same is deposited to the Government exchequer. This is already causing many people to shift bookings to international portals in search of lower prices. Adding TCS to it will completely kill the business.
Speaking on the matter, Riaz Munshi, President, OTOAI said, “The Aviation Industry is already in turmoil and the condition of the tourism sector is no better. Implementation of TCS will further impact a lot of companies, especially small and medium companies, and will force them to shut the business, which will further add to the alarmingly high number of people losing their jobs in the tourism sector. The travel and tourism industry provides jobs to around 11 per cent of the total population today and the suffering of the Tourism sector will vastly affect the employment quotient of the country. The Government must listen to us and roll-back the implementation of TCS.”