Tour operators urge govt to withdraw hike in tax on overseas packages

"Such a move has put domestic tour operators at a disadvantage as the bookings are moving to foreign tour operators," the board said.

The association says that while inbound has still not recovered, losing business in outbound to global players will hurt Indian travel MSMEs who make up for more than 95 percent of the industry.

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The board of the Federation of Associations in Indian Tourism & Hospitality (FAITH) — an umbrella body representing the hospitality and travel industry — has appealed to the government to withdraw the increase in the tax collection at source (TCS) on overseas tour packages announced in the Finance Bill 2023.

“Such a move has put domestic tour operators at a disadvantage as the bookings are moving to foreign tour operators,” the board said.

This step to hike the TCS from 5 per cent to 20 per cent has greatly undermined the business prospects of Indian tour operators who were beginning to see a revival of tourism sector after a dry spell ude to the pandemic.

Nakul Anand, Chairman of FAITH, said, “This will make our domestic tour operators uncompetitive vis-a-vis the foreign tour operators. They would not just face huge stress but this can potentially lead to business shutdowns and loss of jobs.”

He added: “We understand that the sole objective of introducing TCS on foreign travel is to bring more and more people into the tax net. However, this purpose would not be served as the travellers can simply start booking with foreign tour operators.”

The association said that while inbound has still not recovered, losing business in outbound to global players will hurt Indian travel MSMEs who make up for more than 95 per cent of the industry.

In fact, the FAITH board has urged the government to not only roll back the hike in TCS rate but even it to 2.5 per cent, which is half the previous rate, so that more people book their foreign trip through Indian tour operators based in India while the objective of bringing more people into the tax net is also met.

Divya A

Divya A reports on travel, tourism, culture and social issues - not necessarily in that order - for The Indian Express. She's been a journalist for over a decade now, working with Khaleej Times and The Times of India, before settling down at Express. Besides writing/ editing news reports, she indulges her pen to write short stories. As Sanskriti Prabha Dutt Fellow for Excellence in Journalism, she is researching on the lives of the children of sex workers in India. ... Read More

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