Expedia to stop 'pay now' option for foreign bookings on TAAP India site

The online travel booking company said that it will do so 'given the complexity of complying to the changes' to the TCS rules which will come into effect on July 1

Online travel bookings platform Expedia will stop the "pay now" option on all international bookings on its Travel Agent Affiliate Programme (TAAP) India site. The platform has taken this decision in the backdrop of changes in India's tax collected at source (TCS) regime. The TCS on foreign remittances will increase to 20 per cent from July 1.

Expedia TAAP is the company's web-based booking platform for travel agents with over 3 million agent bookings per year. It allows the partners to make the bookings and make packages on behalf of travellers who are unable to do so online.

In a statement, the company said that it will do so "given the complexity of complying to the changes".

"Domestic bookings and international 'pay later' bookings are unaffected," it said.

The changes were shared on Twitter by Manish L Makhija, one of Expedia TAAP partners.

In the Budget 2023, finance minister Nirmala Sitharaman announced raising TCS for foreign remittances under the LRS scheme from 5 per cent to 20 per cent.

TCS on remittances made under the LRS was introduced in 2020. The purpose was to monitor the remittances made and to correlate these with the income tax returns of those who made the remittances. Presently, different rates of TCS apply depending on the nature of the transaction.

While the travellers can claim a refund on this TCS when filing returns, they will have to shell out the higher upfront cost initially.

Any spending through a debit card, credit card, foreign currency or forex card outside India will attract a higher TCS. TCS is applicable whether the payment for the tour package is made in Indian rupees or foreign currency.

Earlier, the announcement hinted that all the transactions would attract a higher TCS. But after backlash, the ministry clarified that TCS would no longer be levied on any payments made by individuals using international debit or credit cards, as long as the amount is within Rs 7 lakh per financial year. Any payment beyond the Rs 7 lakh limit will attract a TCS of 20 per cent.

However, payments made for education and medical purposes will not attract the same TCS norms as earlier. TCS will also not apply to the payments for purchasing foreign goods/services from India, such as newspapers or online streaming services.

Earlier, another online booking platform MakeMyTrip made the option to "Pay at Hotel" available to its customers. By this, they will not be charged a 5 per cent goods and services tax (GST) applicable on such bookings. They will be just required to pay 20 per cent TCS while making their bill payments at the foreign hotel.