CBDT notifies exemption from applicability of TCS provisions u/s 206C(1G) in the case of an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Income Tax Act, 1961 and who is visiting India, i.e. domestic tour operators need not collect tax on sale of overseas tour package to non-resident individuals visiting India. It may be noted that subsequently this Notification has been withdrawn/ superseded w.e.f. 17/08/2022 vide Notification 99/2022.
First, CBDT notified that TCS rules under IT Section 206C(1G) will not apply to non-resident buyers who do not have a Permanent Establishment (PE) in India, from 17/08/2022, i.e. non-resident buyers who do not have a PE in India are exempt from TCS under IT Section 206(1G), vide Notification 20/2022 dated 0/03/2022. Later, CBDT has been withdrawn/ superseded this relaxation vide Notification 99/2022.
Also refer the CBDT Press Release dated 31/03/2022, in this regard.
Any tax collected during the effective time of an earlier Notification, on the other hand, shall be recognised as compliance with the provisions of section 206C(1G).
CBDT Income Tax Notification 99/2022 dt. 17/08/2022: S. 206C(1G) TCS Not Applicable to Non Resident buyers without PE in India
S.O. 3878(E).- In exercise of the powers conferred by clause (ii) to fifth proviso to sub-section (1G) of section 206C of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as “Act”) and in suppression of the notification of the Government of India, Central Board of Direct Taxes published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide number S.O. 1494(E), dt. 30/03/2022, except as respects things done or omitted to be done before such suppression, the Central Government hereby notifies that the provisions of sub-section (1G) of section 206C of the Act shall not apply to a person (being a buyer) who is a non-resident in terms of section 6 of the Act and who does not have a permanent establishment in India.
2. This notification shall come into force with effect from the date of publication of this notification in the Official Gazette.
I have a doubt abbot the TCS applicability on outbought tour packages, as to applicability in the case of tour package booking by an NRI /Foreign Citizens from an Indian company based at India, for travelling to an international location. If the same is applicable, whether he can claim tax credit and what should be the rate of TDS? If it is not applicable, then we have got another challenge that we are facing, i.e. without TCS declaration banks/forex companies will not do an international remittance. Need clarity.