The Federation of Associations in Indian Tourism & Hospitality (FAITH), an umbrella body representing the hospitality and travel industries, has asked the government to reverse the increase in tax collection at source (TCS) on overseas tour packages announced in the Finance Bill 2023. Such a move has put domestic tour operators at a disadvantage as bookings are shifting to foreign tour operators, said the board. This decision to raise the TCS from 5% to 20% has severely harmed the business prospects of Indian tour operators, who were beginning to see a revival of the tourism sector following a dry spell caused by the pandemic. According to the association, while inbound has yet to recover, losing outbound business to global players will hurt Indian travel MSMEs, which account for more than 95 percent of the industry. In fact, the FAITH board has urged the government to reduce the TCS rate to 2.5 percent, which is half the previous rate, so that more people book their foreign trips through Indian tour operators based in India while also meeting the goal of bringing more people into the tax net.
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