India: The Center withdraws 5% of the TCS on organized trips to NRIs visiting India

In major relief for non-resident Indians visiting home, the Center said on Thursday that the national tour operator is now no longer required to collect tax on the sale of overseas tour packages to non-residents visiting the country. ‘India.

The Central Board of Direct Taxation (CBDT) has relaxed the 5% withholding tax provision under Section 206C(1G) of the Income Tax Act 1961.

Section 206C(1G) of the Income Tax Act 1961 provides for the collection of tax by the seller of an overseas tour package from a purchaser, being a person purchasing such organized trip, at the rate of 5% of the amount of the package.

The CBDT said representations had been received from domestic tour operators who were facing difficulties in collecting taxes from non-resident persons visiting India who were booking overseas package tours with these domestic tour operators.

“Since these individuals may not have a PAN, tax should be levied at higher rates. Additionally, these non-residents may have difficulty providing their ITR and claiming refunds,” said the Ministry of Finance in a statement released Thursday.

The relaxation will be extended to a buyer who is an individual who is not resident in India within the meaning of clause (1) and clause (1A) of section 6 of the Act and who is visiting India.

Experts call it a welcome step and said the move will encourage travel bookings from India.

“The purpose was to collect information and monitor the tax compliance of private spenders. 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, when booking their return tickets from India,” said Neeraj Agarwala, Partner, Nangia Andersen LLP.

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