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 is pleased to inform that as per the revised clarification table, Sl. No. 8 of the relevant
sub-section, which earlier mandated TCS at the rates of 5% and 20% on the sale of overseas
tour programme packages, including expenses towards travel, hotel stay, boarding, lodging, or
any related expenditure, has now been rationalised to a flat 2% TCS, without any threshold
limit. This marks one of the most meaningful tax relief measures the outbound tourism sector
has witnessed 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 travellers as well as domestic outbound tour operators. The revised
structure will substantially ease this burden and improve 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 Shri 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 which EY, working closely with OTOAI, provided
strategic inputs and constructive dialogue to reinforce 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, and will help prevent the
shift of business from Indian operators to overseas tour operators, thereby strengthening the
domestic outbound tourism industry.
This development marks a crucial step forward for the outbound tourism sector – one that not
only eases immediate financial pressure but also sets a positive tone for sustainable 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.
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