THIRUVANANTHAPURAM: The recent decision of the Union government to hike the tax collected at source (TCS), from 5% to 20%, has come as a blow for visitors to international destinations. Kerala tops the southern states in outbound tourism and holds a 20-25% share of the national total.
According to Indian Tourism Statistics 2022, India recorded 7.9 million outbound tourists in 2020, at a CAGR of 4.67% from 1.9 million in 1990. The revival of the travel and tourism industry following the pandemic propelled the number of tourists to foreign destinations. The higher tax will only demotivate travellers, say industry experts.
“After the easing of lockdown restrictions, people have been travelling more, and Malayalees, especially, have been travelling like never before. People are travelling not because they are extremely rich but for the passion to travel and see the world. The hike in tax has come as a big blow for those visiting premium destinations.
A person choosing a Rs 10 lakh package will now have to pay around Rs 2 lakh as tax. Neither the state nor the Centre is doing much to promote outbound tourism. Despite the spike in airfares, people are ready to travel and the revised tax is exploitation,” said Benny Panikulangara of Benny’s Royal Tours Pvt Ltd.
According to insiders, people are now hesitant to book tour packages. “We curate tour packages based on demand. I received around 15 bookings even before the official announcement of our exclusive South American package. The new tax rate is proving a deterrent,” said Benny. Industry stakeholders in the state are gearing up to submit a memorandum to the Centre seeking relaxation in the tax. “We are going to take this up with V Muraleedharan, the Union minister of state for external affairs. We hope the government will reinstate the old rate,” he added.
The US, the UK, Thailand, Indonesia, and Japan are some of the preferred destinations for travellers from Kerala. Confederation of Kerala Tourism Industry president and Indian Association of Tour Operators senior vice-president, E M Najeeb, said a representation has already been placed before Finance Minister Nirmala Sitharaman. “The hiked tax will adversely impact the industry and we hope the Centre will scrap the decision,” said Najeeb.
According to stakeholders, the tax was hiked without proper evaluation or consultation. “It is an additional burden on people desiring to travel abroad. People are working hard to pay for their vacation trips. Eventually, people will find ways to evade taxes by booking tour packages via international tour portals. Or, they will pay for the trips after reaching the destinations,” said Rajesh P R, an outbound tour guide.