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Big Relief for India Tour Operators on Withdrawal of Tax

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The Indian Association of Tour Operators (IATO) expressed its sincere gratitude to the Government of India for withdrawing the Tax Collection of Source (TCS) on sale of overseas tour packages for foreign tourists who book tours through tour operators located in India.

According to Mr. Rajiv Mehra, President of Indian Association of Tour Operators: “This decision is a big relief for the entire travel and tourism fraternity as it was not logical to collect tax at source from the Foreign Tour Operators/Foreign Tourists as they are not residents of India. They neither possess any Indian PAN card nor they pay any income tax  and hence are not liable to the Indian Income Tax Law. Therefore, there is no scope for them of availing any refund from the Levy of TCS. These persons are subject to taxation in their native country. It was, therefore, necessary that the provisions of TCS should not be made applicable to persons/companies who are Indian resident/located outside India.

Tax Collection of Source is tax that is payable by the seller, but which is collected from the buyer.

“The Association apprehended that in case TCS is collected from non-resident buyers such as FTOs, individual foreign citizens/tourists, the Indian Tour Operators will lose their business as the non-resident buyers will directly approach the tour operators based in Nepal, Bhutan, Sri Lanka, Maldives etc. and buy the overseas tour package from those tour operators directly skipping Indian Tour Operators, resulting in loss of business for the Indian Tour Operators and a portion of foreign exchange. The Association strongly recommended that the provisions of TCS should be amended not to be made applicable to sale of overseas tour package to non-resident class of buyers/FTOs for packages outside Indian territory.

“This matter was also taken up personally with Hon’ble Finance Minister Mrs. Nirmala Sitharaman when we met her in her office on July 16, 2021, along with other issues, and Hon’ble Finance Minister understood our viewpoint and assured to look into this matter positively. Ministry of Tourism also supported us and took with the Ministry of Finance strongly.

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“We thank the Hon’ble Finance Minister, Ministry of Finance and Ministry of Tourism for understanding our viewpoint and withdrawing Tax Collection at Source (TCS) on sale of overseas tour packages for foreign tourists booked through tour operators located in India.”

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Anil Mathur - eTN India

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