Centre withdraws 5% TCS on tour package to NRIs visiting India

In a significant relief to Non-Resident Indians visiting home, the Center on Thursday said domestic tour operator is presently not expected to collect tax on the sale of abroad tour packages to non-resident people visiting India.

The Central Board of Direct Taxes (CBDT) has loosened up the provision of Tax Collected at Source of 5% under segment 206C(1G) of the Income Tax Act, 1961.

Segment 206C (1G) of the Income Tax Act, 1961 accommodates for the collection of tax by a merchant of an overseas tour program bundle from a purchaser, being an individual buying such a bundle, at the rate of 5% of the amount of the bundle.

The CBDT said portrayals were gotten from domestic tour operators who were confronting hardships in the collection of duty from non-occupant people visiting India who were reserving abroad tour packages from such domestic tour operators.

“Since such persons may not have a PAN, tax is required to be collected at higher rates. Further, such non-residents may find it difficult to furnish their ITR and claim refunds,” the finance ministry said in a statement issued on Thursday.

“The purpose was to collect information and monitor tax compliances of high spending individuals. However, the way the provisions were drafted, tour operators were even required to collect taxes from non-residents, who are otherwise not taxable in India, at the time of booking their return tickets from India,” Neeraj Agarwala, Partner, Nangia Andersen LLP said.

The relaxation will be stretched out to a purchaser being a person who is definitely not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act and who is visiting India.

Specialists call this a welcome advancement and said the move would energize the travel appointments from India.

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