Increase in Budget: Foreign holiday and remittance to charge more bucks

The budget 2020 imposes five percent tax on foreign holidays and remittances with no specific leeway. Tour operators and forex dealers await details and confirmation.

By Trinetra Paul and Karim Mohammadi

Chennai, Feb 6: Travellers and tourists buying international holidays would soon have to shell out extra bills after Finance Minister Nirmala Sitharaman presented her budget 2020 on Feb 1. She announced that money going out of the country in the form of remittances and travel would now be taxed.

The budget proposes to impose five percent tax on any international holidays packages bought from tour operators with effect from Apr 1. Those failing to produce their Aadhar card or PAN card would have to pay a tax of 10 percent. The tour operators can charge the tax amount as TCS at the time of purchase.

The budget also stated that the five percent tax would be charged as TCS for remittances over Rs seven lakhs.  This has introduced a new TDS provision whereby authorised foreign exchange dealers shall charge five percent tax from the buyers.

Under the liberalised Remittance Scheme (LRS) a person is entitled to send $250,000 per year. On sending more than seven lakh, the tax would be deducted as TDS by the forex dealer and paid as TCS to the income tax department.

Rupak Paul, national head of foreign exchange, Thomas Cook (India) said, “We are aware of the introduction of such a tax but no clearance has been received. We have written to the government regarding the details.” He said, the announcement does not specify whether the date mentioned is the purchase of the holiday or the date of travel.

Shubhasish Dhar, accounts and retail head of Make My Trip said, “Our clients have expressed similar doubts about their holidays but without proper clearance and conformation nothing can be done. The budget does specify the tax so once the details are sent we shall imp0lement it accordingly.”

Wahidullah Najmi, manager of Kam Air, an Afghan travel agency expressed same views. “Persons and students coming from India shall be charged accordingly only when the government mandate is confirmed and circulated. Till then we are charging our nominal fares.”

A middle aged tour operator based in Chennai, who did not wished to be named, said, “the tax details have not been notified. However it will not make much of a difference for the travellers. But the loss incurred for the corona virus outbreak is more. People are cancelling their holidays in huge numbers.”

The only exception is given if the buyer is the government itself or if the operator has deducted the tax under other Act which specifies the same clause and amount.