Union Budget: How will TCS cuts result in quality travel experience? Experts explain
While 5 per cent TCS was previously collected for tours costing up to ₹7 lakh and 20 per cent for those over ₹7 lakh, from now on, both will be charged at 2 per cent.
While 5 per cent TCS was previously collected for tours costing up to ₹7 lakh and 20 per cent for those over ₹7 lakh, from now on, both will be charged at 2 per cent.
While 5 per cent TCS was previously collected for tours costing up to ₹7 lakh and 20 per cent for those over ₹7 lakh, from now on, both will be charged at 2 per cent.
Union Finance Minister Nirmala Sitharaman's proposal to reduce the TCS (tax collected at source) rate for overseas tour packages to 2 per cent, without any minimum amount stipulation, has thrilled many regular overseas travellers. This is a substantial reduction from the 5 per cent TCS charged earlier for tours costing up to ₹7 lakh and 20 per cent for those costing over ₹7 lakh. How will it help both tourists and travel agents? Industry experts explain.
Help for tourists
According to Varghese Oommen, Managing Director and CEO of Oriental Routes, the reduction in pricing due to lower TCS will encourage travellers to go through agents more often and avail of quality trips. "It's a welcome change, especially as we are nearing summer vacation time. There can be a minimum of 10 to 20 per cent increase in sales, following the TCS reduction. This is a period when many people travel abroad. Though a lot of tourists, especially youngsters, are into DIY trips these days, going through an agent has its own benefits - from reliability of booking to getting relevant information on the destination they are travelling to," he explains. The cut in TCS also means that travellers won't have to wait for tax refunds to get their money back, he says.
According to KC Chandrahasan, Head of Kerala Travels Interserve, the TCS reduction might have been introduced as the dollar rate has gone up. "This can be a consolation factor for tourists, who would otherwise have to pay more in rupees," he explains.
Will it affect domestic tourism?
So with the government incentivising foreign trips, will it hurt domestic tourism, wonder many on social media. They argue that those who used to travel inside the state or India might be tempted to plan a trip abroad. However, Benny Thomas, Head of Holiday Shop, begs to differ. "TCS was, anyway, a 100 per cent refundable amount that the government kept for a short-term. Therefore, domestic tourism won't be affected by this."