The Travel Agents’ Association of India (TAAI) has urged Finance Minister Nirmala Sitharaman to defer implementation of the revised tax collected at source of 20 per cent on tour packages of over Rs 7 lakh.

TAAI has petitioned the government to put on hold the implementation of the revised tax rate, which is to become effective from October 1.

“Currently RBI/ banks are not equipped to maintain and monitor the limit of Rs 7 lakh per traveller, and there is no mechanism to track the same. We request that a mechanism be put in place so that monitoring can be effective without loopholes,” TAAI said in its letter on Wednesday.

The travel agents added that with the increased tax rate, they ran the risk of losing business to foreign travel companies. “Indian tour companies have become less competent than operators working outside India, who save on 5 per cent GST and TCS (5 to 20 per cent) and have no registration in India,” TAAI wrote.

The amended tax rate, which was part of the Budget proposals, was to come into effect from July. However, its implementation was postponed to allow banks and credit card companies to introduce necessary solutions for implementation.

Originally, the government had proposed an increase in the income tax rate from 5 to 20 per cent for remittance under the liberalised remittance scheme and for overseas tour packages. The government had also removed the Rs 7 lakh threshold for triggering tax collected on source on remittances. The amendments didn’t apply to remittances for education and medical purposes. 

Following industry objections, the government retained the Rs 7 lakh threshold per individual for all categories of remittances regardless of mode of payment.