Withdraw income tax on overseas tours, travel agents petition PM Modi

The Travel Agents Association of India (TAAI) has urged the government to roll back the budget proposal to collect five per cent income tax at source from outbound travellers as this gives unfair advantage to foreign travel firms.

"International online travel companies and foreign tour operators with a base outside India are booking air tickets, hotels and tour packages directly for travellers without collecting any GST or taxes. They shall not even collect income tax at source (TCS). Due to this the business of Indian companies shall be transferred to overseas travel companies by travellers directly resulting in a loss of tax revenue for Indian government," TAAI said in an online petition to Prime Minister Narendra Modi. The move will impact 60,000 travel agencies employing over two million individuals.

The government introduced five per cent TCS on overseas tour packages with an aim to plug revenue leakage. Although not an additional tax it would increase cash outgo of travellers. This tax amount then would adjusted with total tax liability of an individual. 

Travel agents say the introduction of TCS will increase compliance cost of the local companies and will be contrary to the ease of doing business. "Presently 5 per cent GST is collected from the traveller and paid to the government exchequer. Already here too were becoming uncompetitive vis a vis global traveller companies as many travellers are booking directly with overseas vendors," TAAI said.