The Indian government’s decision to remove the 5% withholding tax (TCS) levied on foreign travel agencies purchasing packages from Indian companies has drawn approval from stakeholders.
Tour packages for neighboring destinations like Bhutan, Nepal and the Maldives are often purchased through Indian tour operators, but the TCS and another 5% goods and services tax have made these products more expensive and cheaper. attractive.
The Indian Association of Tour Operators (IATO) had challenged the TCS, filing demands with the government to withdraw the tax and making appeals to the Ministry of Finance, citing the disadvantage it brought to its members.
According to IATO President Rajiv Mehra, the TCS eroded “precious foreign currency as business moved to other countries”.
In March 2022, the Indian government relaxed the terms of the TCS, waiving the collection of overseas tour packages sold to non-residents of India.
Lally Mathews, managing director of Divine Voyages, said the complete removal of TCS “will encourage travel bookings from Indian tour operators”.
“Given the setbacks that small and medium tour operators have suffered due to the pandemic, we need such positive support from the government,” he added.