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The cost of domestic travel may not change much post a 5 per cent GST rate but when it comes to outbound packages, tour operators are still trying to figure out whether the same rate would apply and are hoping for more sops as local taxes cannot be charged on services in a foreign territory.
While there is clarity on inbound packages, the pricing and cost of outbound packages are still being debated upon by travel companies that are trying to make further representations to the government on removing GST on outbound packages.
“GST should be charged on the margins we make and not on the total outbound packages. While we do not mind paying taxes, outbound travel taxes will go up by 5 per cent with a cascading effect. There would be a tax on tax with respect to hotels and airlines which are already taxed as part of the packages,’’ said Pronab Sarkar, President of the Indian Association of Tour Operators.
While domestic travel is set to gain from the recent GST, travel companies are now worried about the taxes to be levied on international trips.
Viren Batra, Founder, Nirvana Excursions, said, “When travel services are given in a foreign destination, it is not possible to have GST charges. We are hoping to get more clarity.’’
With no input credit for the 5 per cent GST on travel, services rendered outside India will have an indirect impact on the travel operators. “Exports of goods are never taxed as a rule and the same rule should apply for export of services as well, post GST,’’ argues Sarkar of Indian Association of Tour Operators.
While the ambiguity regarding outbound packages post GST is yet to be cleared, overlapping of taxes will remain an issue. “While 5 per cent is the GST amount is to be paid for all tours, the issues facing the outbound segment is going to be more. But there is going to be no escaping GST since the services are rendered to Indian nationals when they travel abroad. There is also double taxation when packages are bought from wholesale players in the B2B segment by retail travel agents,’’ said Zakkir Ahmed, Trust Travel & Tours and past-President, TAFI (Travel Agents Federation of India).
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