According to Mahesh Iyer, Executive Director and Chief Executive Officer, Thomas Cook India Limited, “The travel and tourism sector is one of the key contributors to the country’s GDP, and a vibrant tourism industry not only catalyses growth in allied sectors like hospitality and aviation, but also plays a vital role in direct and indirect employment generation. We much appreciate the Government’s tourism focussed initiatives and look forward to a continuum with increased allocation towards schemes.
However, our wish list also includes three key aspects:
First, that the Air Travel Agent (ATA) should be outside the purview of Tax Collection at Source (TCS). Given that IATA indicates an ATA to be an agent appointed by airlines to sell tickets and that Section 52 of CGST Act specifically excludes agents from the provision of collection of tax at source, however, the FAQ issued by CBIC suggests that travel agents are subject to TCS. Hence, there is an urgent need for clarity on the said issue.
Secondly, with reference to eligibility in claiming input tax credit on the tax charged by the airline, we recommend that the proviso to section 16 (2) should be amended to provide for the specific scenario of payment made by corporates or registered passengers to a travel operator. These payments, should be deemed to be payment made to the airline (supplier). This would mitigate the risk of reversal of ITC in case of non-payment to the supplier within 180 days and interest implications thereon.