\n<\/p>\n
According to sources, discussions are currently underway at the highest levels of government on imposing either a cess, tax or surcharge on outbound foreign travel. However, no final decision has been taken yet.<\/p>\n
The proposal comes at a time when India is grappling with the ripple effects of rising geopolitical tensions in West Asia, which have triggered volatility in global crude oil prices, shipping and freight rates, and overall import costs.
Sources said the move could serve a dual purpose \u2014 generating additional revenue for the Centre while also discouraging non-essential foreign travel and helping conserve foreign exchange reserves.<\/p>\n
The deliberations gain significance in the backdrop of Prime Minister Narendra Modi\u2019s remarks during his address in Hyderabad on Sunday, where he urged citizens and businesses to adopt austerity measures amid global uncertainty. The Prime Minister appealed to people to avoid unnecessary foreign travel and focus on prudent spending, signalling the government\u2019s growing concerns over external vulnerabilities and forex outflows.<\/p>\n
Sources indicated that the proposed levy, if approved, is likely to be temporary and may remain in force for around one year. The structure of the levy \u2014 whether as a cess, surcharge or additional tax \u2014 is still being evaluated.<\/p>\n
Importantly, sources added that revenue generated from any such levy on foreign travel would flow directly to the Centre and would not form part of the divisible tax pool shared with states.<\/p>\n
\n\u201cThis gives the Union government greater fiscal flexibility at a time when it may need additional resources to offset higher subsidy burdens and rising import bills linked to elevated crude prices,\u201d sources added.<\/p>\n
Industry experts said the move, if implemented, could significantly impact India\u2019s booming outbound tourism market, which has witnessed strong post-pandemic growth. International holiday packages, overseas education-related travel, premium leisure trips and even business travel costs could become more expensive.<\/p>\n
Travel and aviation sector players are also expected to closely monitor the contours of the proposal, especially if the levy is linked to ticket pricing, tour packages or foreign exchange spending under the Liberalised Remittance Scheme (LRS).<\/p>\n
It is also significant that the government had earlier moved in the opposite direction by easing the tax burden on foreign travel through changes in the Tax Collected at Source (TCS) regime under the LRS.<\/p>\n