OTOAI & EY’s Joint Efforts Deliver Breakthrough TCS Relief for Outbound Tourism Industry
The Voice of Chandigarh | Travel Trade Reporter
In a major policy breakthrough for India’s outbound travel ecosystem, the Outbound Tour Operators Association of India (OTOAI), in close collaboration with Ernst & Young (EY), is pleased to announce the successful securing of a significant reduction in Tax Collected at Source (TCS) on overseas tour programme packages under the Finance Bill 2026.
OTOAI informs that, as per the revised clarification table, Serial No. 8 of the relevant sub-section, which earlier mandated TCS at rates of 5% and 20% on the sale of overseas tour programme packages, including expenses related to travel, hotel stays, boarding, lodging, and other associated expenditures, has now been rationalised to a flat 2% TCS, with no threshold limit. This change represents one of the most meaningful tax relief measures for the outbound tourism sector in recent years.
Under the earlier regime, outbound tour packages attracted 5% TCS on payments up to INR 10 lakh and a steep 20% on amounts exceeding INR 10 lakh, creating significant financial and operational challenges for both travellers and domestic outbound tour operators. The revised structure is expected to substantially ease this burden and enhance affordability for Indian travellers.
OTOAI extends its sincere appreciation to the Government of India, particularly the Ministry of Finance and the Ministry of Tourism, and conveys special thanks to Gajendra Singh Shekhawat, Hon’ble Minister of Tourism, for acknowledging the industry’s concerns and taking proactive steps to enhance the competitiveness and growth of India’s outbound tourism sector.
This milestone follows nearly two years of sustained engagement with policymakers, including officials from the Ministry of Finance. During this period, EY, working closely with OTOAI, provided strategic inputs and engaged in constructive dialogue to strengthen the industry’s submissions and advocate for a more balanced and equitable tax framework.
Importantly, this revision addresses the long-standing concern of an uneven playing field between domestic outbound tour operators and overseas entities. It is expected to prevent the diversion of business from Indian operators to foreign tour companies, thereby reinforcing the strength of the domestic outbound tourism industry.
This development marks a crucial step forward for the outbound tourism sector—one that not only alleviates immediate financial pressure but also sets a positive tone for sustainable long-term growth. With a more balanced and traveller-friendly tax framework now in place, India’s outbound travel landscape is poised to expand with renewed confidence and momentum.
