Currently, 5 per cent TCS is levied on overseas tour packages irrespective of spending.
The onus of deducting TCS should be banks, in case a person makes an overseas hotel booking using the e-commerce portal of tour operators, said a senior official of MakeMyTrip, a leading online travel service provider.
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MakeMyTrip Group Vice President-Taxation Tajinder Singh said, in case a tour package is booked from the e-commerce portal, the company will take an undertaking from its customers, on whether the total amount remitted abroad so far has exceeded the threshold of Rs 7 lakh in the fiscal year.
The government has said that from October 1, a 5 per cent Tax Collected at Source (TCS) will be levied on tour packages up to Rs 7 lakh in a fiscal. The rate will go up to 20 per cent for spending beyond the threshold.
Currently, 5 per cent TCS is levied on overseas tour packages irrespective of spending.
Singh said TCS collection on overseas tour spendings has two aspects — one where a tour package is booked using the e-commerce portal and secondly, when the customer uses the portal to make a standalone hotel booking.
He said in case of tour packages booked from an e-commerce website, the company will seek a declaration from customers about the total money remitted so far in a fiscal year.
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In case of standalone hotel booking, he said it will fall in the category where authorised dealer banks would be responsible for taking this declaration from customers.
“We have been talking to banks that for these declarations, banks will have to come up with their own facility and infrastructure where they would be able to directly use the KYC data available of their customers to collect the information directly from customers. That is where we are pushing it to the banks to do the compliances at their end.
“It is the compliance of the banks. Banks are liable to collect the TCS from customers who are remitting outside India. The compliance is on banks, but because we are intermediaries we will have to pitch-in somewhere and facilitate this,” Singh said.
The government’s decision on levying higher TCS on overseas tour packages beyond Rs 7 lakh would impact outbound tourism.
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“A lot of customers would be looking at the higher TCS rate as a cost… The higher cash outflow at the time of booking might pinch a lot of customers and they might curtail their expenditure,” Singh added.
