Emirates News Agency – India delays tax on overseas tourism spending

NEW DELHI, 29th June, 2023 (WAM) — Spending by Indian tourists on hotel rooms, entertainment, consumables and other items in favorite overseas destinations like Dubai and Abu Dhabi will remain steady for the rest of the year.

Earlier, the Indian Ministry of Finance decided to postpone the 20% tax on the annual overseas spending of Indians. The tax should start from 1^Yingshi July is the peak season for Indian outbound tourism.

“There have been many proposals from banks, the tourism industry and the public for the new tax, which have been carefully considered,” the Treasury said yesterday. “It has been decided to give more time to implement the revised tax at source (TCS).”

The new tax will also cover the sale of overseas travel packages. A large number of Indians go to popular tourist destinations such as the United Arab Emirates by purchasing group tours. If the new tax is not delayed, the cost of these tours will rise by 20 per cent from next week.

“Transactions made by Indians overseas via international credit cards will not be counted as part of the Liberal Remittance Scheme (LRS) and are therefore not subject to TCS,” the ministry said yesterday.

Remittances of less than 700,000 Indian rupees ($8,500) for Indian children to be educated in schools such as the UAE will not incur any tax. Above this limit, a TCS of 0.5% will be levied.

Overseas medical and travel package remittances above INR 700,000 limit are already subject to 5% TCS. The Indian media commented today that the proposal to increase the TCS is “for all practical purposes now frozen”.

WAM/Krishnan Nayyar