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

Travel trade takeaways: The domestic as well as international tourist destinations, have witnessed increasing popularity among holidaymakers in India. Tourist influx to the country has also seen a spurt- thanks to the post-Covid recovery. In the run up to interim Union Budget 2024, Republic Business reached out to umbrella body Travel Agents Association of India (TAAI), and leading tour and travel companies, including Thomas Cook India and SOTC to seek their 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 the marginalised tour operators and helping them join the tourism mainstream. In an interview with Republic Business, TAAI President Jyoti Mayal, resonating views of other travel players, expressed concern over the 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 the negative impact. It is displacing business from Indian travel companies to companies out of India as the product sold from India has become 15 to 20 per cent more expensive at the time of booking when booked through Indian travel and tour companies. 3-5 percent margin, plus the 5 per cent GST as is applicable and now additionally the proposed TCS,” said Mayal. She said higher TCS is creating a huge additional cost of compliance and will lead to numerous risks of litigation.  

Mayal said there is an urgent need for stringent policies to keep a close check on online travel platforms to build the confidence of the customers. “Hidden charges, price fluctuations, SaaS billing and rogue malwares issues must be addressed on priority. There 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 the growing chorus of the travel industry demanding reduction in TCS on overseas tour package bookings, Madhavan Menon, Executive Chairman, Thomas Cook India said standardisation of TCS at 5 per cent on foreign travel packages as against the 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 the government’s target of achieving $1 trillion by 2047, tourism sector forms a strong force multiplier. We are hopeful that the Union Budget focuses on infrastructural development such as setting up of new airports through  private participation and creating expansion in rail, road and waterways mobility. Additionally, 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.  “The leave travel allowance (LTA) exemption annually instead of twice in four years can catalyse domestic tourism,” the Thomas Cook India head said. Menon said travel trade players have been urging the government to allow the GST input credit facility for inbound and domestic tourism. Besides, simplifying  compliance mechanisms in filing of reports, reconciliations and audits is also on the travel segment’s wishlist.  

SOTC Travel bats for more connectivity 

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

Image credit: Unsplash 

The 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 the government's commitment to ease of doing business and digital adoption, and the 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,” the SOTC MD said. Suri said connectivity to remote but viable tourism areas, creation of vibrant new circuits and having employment that uplifts the entire ecosystem will also be a shot in the 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 added. 

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