India’s government stated that they have exempted travel agents and tour operators from collecting taxes on Non-Resident Indians who visit India and book a tour package abroad through any Indian travel operator or agent.
According to the tax rules previously in effect, domestic tour operators must collect 5% Tax Collected at Source (TCS), on foreign tour packages sold.
The Income Tax Act permits a seller of an overseas package tour to collect tax at a rate equal to 5% of its value from a buyer.
The Central Board of Direct Taxes received representations from domestic travel operators that were having difficulties collecting taxes from nonresident Indians who visited India and purchased international vacation packages from them.
Higher tax rates were required because such individuals might not have a PAN. According to the CBDT, non-residents might have trouble filling out their ITRs or claiming refunds.
According to the CBDT, a domestic tour operator does not have to collect any tax for selling an international vacation package to non-resident Indians.
Neeraj Agarwala is a Partner at Nangia Andersen LLP. He stated that the TCS’s goal was to collect and monitor tax compliances for high-spending individuals.
Tour operators were required to collect taxes from Indian non-residents when they booked their return tickets.
Agarwala said, “This is a positive move that would increase travel bookings in India”.
TCS On Foreign Tour Package:
- Nature of Transaction Remittance to purchase an Overseas Tour Package
- The person responsible for collecting the Overseas Tour Package Seller
- Whom to collect from Overseas Tour Package buyer
- Time of Collection The time at which the buyer is debited or the receipt from the buyer.
- TCS Rate – 5% of the amount received by the buyer
- 10% if there is no PAN for such a person:
TCS Exemption
TCS Exemption will be on the following conditions:
- Liable to deduct TDS tax under any other provision in this Act, and has deducted such amount.
- The Central Government, a state Government, an Embassy, a High Commission, and a legation are all examples of the Central Government.
- All non-resident Indians (NRIs), who travel to India and book a tour package abroad through an Indian travel agency or tour operator.
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