India’s online travel providers such as MakeMyTrip, Yatra, Cleartrip and others are in a quandary over the new tax collected at source (TCS) under the goods and services tax (GST). TCS provision mandates all e commerce operators, except those acting as agents, to deduct tax. All such portals, which have online as well as offline business, are also agents of International Air Transport Association (IATA).
A circular issued in September has created some confusion prompting the industry to seek a clarification from the government. “It is not a marketplace. We carry full transaction. We are IATA agents and should not fall under the ambit of TCS. We are seeking a clarification from the government,” said Pravin Chugh, president, Travel Agents Federation of India (TAFI). “We could also approach the courts if we do not get a favourable clarification.” TAFI represents more than 600 travel service providers.
The GST law provides that an ecommerce operator, other than an agent, will need to withhold tax on all payments made to suppliers and deposit the tax collected with the government. IATA agents earn a commission on sales and fulfil the classic definition of agent, according to the industry. However, a clarification issued by government in form of frequently asked questions states that they are ecommerce operators who have come under the ambit of TCS.