Axe the tax: SOTC, Thomas Cook and TAAI bat for lower TCS on overseas tours

Travel tre takeaways: domestic as well as international tourist destinations, have witnessed increasing popularity among holidaymakers in India. Tourist influx to country has also seen a spurt- thanks to post-Covid recovery. In run up to interim Union Budget 2024, Republic Business reached out to umbrella body Travel Agents Association of India (TAAI), and leing tour and travel companies, including Thomas Cook India and SOTC to seek ir views on issues pertaining to tourism sector. 

Travel Agents Association of India (TAAI) 

With its strong influence in country’s policy circles, TAAI is known for extending support to marginalised tour operators and helping m join tourism mainstream. In an interview with Republic Business, TAAI President Jyoti Mayal, resonating views of or travel players, expressed concern over existing 20 per cent TCS levy on overseas tour bookings.  

“As President of TAAI, I feel we are still not in favour of high TCS because we are seeing negative impact. It is displacing business from Indian travel companies to companies out of India as product sold from India has become 15 to 20 per cent more expensive at time of booking when booked through Indian travel and tour companies. 3-5 percent margin, plus 5 per cent GST as is applicable and now ditionally proposed TCS,” said Mayal. She said higher TCS is creating a huge ditional cost of compliance and will le to numerous risks of litigation.  

Mayal said re is an urgent need for stringent policies to keep a close check on online travel platforms to build confidence of customers. “Hidden charges, price fluctuations, SaaS billing and rogue malwares issues must be dressed on priority. re is also a need to conduct dark pattern reviews of online platforms and sector-level surveys to understand as many dark pattern issues experienced by consumers,” she said. 

Thomas Cook India for tax standardisation 

In tune with growing chorus of travel industry demanding reduction in TCS on overseas tour package bookings, Mhavan Menon, Executive Chairman, Thomas Cook India said standardisation of TCS at 5 per cent on foreign travel packages as against current 20 per cent slab must be taken into consideration.

“Travel and tourism sector represents a vital economic driver. With a 5.8 per cent contribution to India’s GDP and government’s target of achieving $1 trillion by 2047, tourism sector forms a strong force multiplier. We are hopeful that Union Budget focuses on infrastructural development such as setting up of new airports through  private participation and creating expansion in rail, ro and waterways mobility. ditionally, infrastructure development for high growth areas like religious circuits and unexplored destinations will boost this sector,” he said. 

Menon said policies must focus on inbound incentive schemes, albeit for select destinations and reduced income tax levels to create higher disposable incomes.  “ leave travel allowance (LTA) exemption annually inste of twice in four years can catalyse domestic tourism,” Thomas Cook India he said. Menon said travel tre players have been urging government to allow GST input credit facility for inbound and domestic tourism. Besides, simplifying  compliance mechanisms in filing of reports, reconciliations and audits is also on travel segment’s wishlist.  

SOTC Travel bats for more connectivity 

SOTC Travel vocates a multi-pronged approach, albeit interim, saying Union Budget offers a significant opportunity as a growth accelerator for travel and tourism sector. “Tourism is a valuable  contributor to a country's GDP and a powerful employment engine. Coalesce TCS rate on outbound tours into a single 5 per cent slab to reduce significant vantage enjoyed by international competitors (exempt from this levy),” said Vishal Suri, Managing Director, SOTC.  

Image credit: Unsplash 

government is currently levying tax deducted at source (TDS) that is levied on automated bookings or self-booking tools for internal and closed user groups such as business travel platforms. In his pre-budget expectations, Suri said doing away with this practice would align with government's commitment to ease of doing business and digital option, and larger objective of building a Digital India.

“We are also hopeful for extension of Udan Yojana and Vande Bharat routes that ensures regional access and affordability,” SOTC MD said. Suri said connectivity to remote but viable tourism areas, creation of vibrant new circuits and having employment that uplifts entire ecosystem will also be a shot in arm for tourism sector in India.​ “Incentives that promote sustainable travel and tourism are now a critical requirement as we endeavour to preserve our planet for future generations," Suri ded. 

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