You might want to keep away from politics but that doesn’t mean you can. For all those who have built a real world in their travelling journal, it’s time to face the music. Budget 2020 is out and here to bust your high. According to some new norms, your next trip abroad could cost more.
“Budget 2020 has imposed a 5% tax collection at source (TCS) on payment to tour operators for foreign travel,” reported Livemint. For booking a foreign tour, Indians will now pay 5% TCS initially. Authorized dealers of foreign exchange like banks will collect this amount. Furthermore, this tax will be doubled if PAN is not provided to the authorized dealers. In that case we will pay 10% TCS. A 5% TCS on payments above ₹7 lakh a year will also be levied under the Liberalised Remittance Scheme (LRS).
“The requirement can’t be practically imposed on foreign travel websites, hotels or other travel firms. Hence, there may be a possible advantage in favour of foreign entities vis-a-vis Indian entities in the tourism space,” Indroneel Dutt, CFO, Cleartrip told Livemint about Budget 2020. He was further quoted, “TCS will be collected by authorized dealers on behalf of the foreign tour operator and not the end consumer. The operator will have to file returns to claim refund. Some operators may decide to pass the added compliance costs to the customers,” Dutt added.
Many details are yet to clarified after Budget 2020. For example, will tax have to be paid by those who already have a bank account abroad and transfer money to themselves? The Reserve Bank of India stated that outflows in LRS rose from $1.09 billion in Fiscal Year 2015 to $11.34 billion in Fiscal Year 2019, as per reports. That includes foreign education, maintenance of relatives, gifts, travel and investment. Foreign travel was the largest component at $4.8 billion. Foreign studies followed at $3.5 billion. TCS curbs may reduce this outflow. It will also add paperwork and costs for consumers.
Nobody likes added costs and paperwork. Will this increase distances between Indian travellers and their dreams? We will find a way!