2023-09-29 19:20:09
Companies and industry bodies have approached the government, suggesting that the banking system should shoulder the responsibility for tracking these expenses rather than travel operators.
“Currently, the RBI (Reserve Bank of India) and banks are not equipped to track the spending limits above Rs 7 lakh per traveller and there is no mechanism to track the same,” Travel Agents Association of India (TAAI) president Jyoti Mayal wrote in a letter to the finance ministry this week.
The association requested for deferment of the new rules and the creation of a mechanism for “effective” monitoring of spending without loopholes. TAAI has also sought a meeting with the ministry on the issue.
The onus of collecting the TCS as of now is on tour operators selling foreign tour packages. Frequent international travellers face potential impact, they said.
“It is still too complex with no clarity for the travellers and the travel agents,” said Rajiv Mehra, president of the Indian Association of Tour Operators (IATO). “The banking or the financial system is still not ready to roll out this tax. The onus of collecting the tax has been put on the tour operators who simply don’t have the systems required for collection,” he added. Ajay Prakash, board member of the Federation of Associations in Indian Tourism and Hospitality (FAITH), said if the purpose is to catch hold of tax evaders, it can be done with just a 2% or 2.5% tax on all kinds of foreign travel.
“This will eliminate the unnecessary hassles this tax is going to create,” he said. “On one hand, we are declaring a goal of a $5-trillion economy, yet we are creating insurmountable problems for the travel sector.”
A senior executive of a major travel company said there is no ready API (application programming interface) or mechanism whereby you can put a PAN number and see if the TCS limit has been breached.
“We are seeking clarity on this. The banking industry should figure this out,” the person said. “They should figure out a mechanism whereby agents can figure out if the payment is under an LRS remittance and then the TCS should be collected. But there is no clarity from the RBI or the banking industry. These are operational challenges,” he said.
“If a traveller pays through multiple cards for multiple trips or packages in a year, how is a single company expected to be held accountable if a limit has been breached? We shouldn’t face the regulatory heat,” the executive said.
In its letter to the finance ministry, TAAI also said a lot of business is getting diverted to overseas tour operators who are exempt from GST and the TCS implementation.
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