The Indian government’s move to withdraw the five per cent Tax Collection At Source (TCS) levied on foreign tour agencies buying packages from Indian companies has drawn stakeholders’ approval.
Tour packages for neighbouring destinations like Bhutan, Nepal and Maldives are often purchased through Indian tour operators, but the TCS plus another five per cent Goods and Services Tax have made these products pricier and less attractive.
The Indian Association of Tour Operators (IATO) had contested the TCS, filing requests with the government to withdraw the tax and issuing appeals to the finance ministry, citing the disadvantage it brought to its members.
According to Rajiv Mehra, president, IATO, the TCS eroded “precious foreign exchange as the business was going to other countries”.
In March 2022, the Indian government relaxed TCS conditions, waiving collection from overseas tour packages sold to non-residents of India.
Lally Mathews, managing director, Divine Voyages, said the full removal of TCS will “encourage travel bookings from Indian tour companies”.
“Considering the setbacks that small and medium tour operators have suffered because of the pandemic, we need such positive support from the government,” he added.