The Centre has relaxed provisions of tax collected at source (TCS) in respect of non-resident individuals visiting India whereby a domestic tour operator is not required to collect tax on sale of overseas tour package to non-resident individuals coming here.

The move is expected to help encourage in-bound tourism. Scheduled international commercial flight operations, to and from India, have already begun March 27 onwards.

The Section 206C (1G) of the Income-Tax Act, 1961 allows collection of tax by a seller of an overseas tour programme package from a buyer, being a person purchasing such package, at the rate of 5 per cent of the amount of the package.

According to a government statement, representations were received from domestic tour operators who were facing difficulties in collection of tax from non-resident individuals visiting the country.

These individuals were booking overseas tour package from such domestic tour operators and since they “may not have a PAN”, tax is required to be collected at higher rates. Further, such non-residents may find it difficult to furnish their Income Tax Returns and claim refunds.

“In order to remove such difficulties, the Central Government, in exercise of powers conferred under section 206C(1G) of the Act, has specified that the provisions of the said section shall not apply to a buyer being an individual who is not a resident in India and who is visiting India,” it said in a statement.

Starting October 2020, Indian tour operators were required to collect 5 per cent TCS on billing to foreign tour operators or individual foreign travellers to India.

Several travel firms including the IATO (Indian Association of Tour Operators) had requested the government to consider withdrawing Tax Collected at Source (TCS) of 5 per cent on sale of overseas holiday package by Indian tour operators.

A notification has also been issued in this regard.

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