The domestic tourism sector, which suffered a major setback during the pandemic, received a boost from the Union budget, with Finance Minister Nirmala Sitharaman proposing the integrated development of 50 destinations. Travel abroad, however, is expected to become more expensive, with the government increasing the rate of withholding tax (TCS) to 20% from 5%. Income tax is collected and paid on payments made for overseas tour, hotel reservation or car rental abroad, even in case of individual purchase. International air tickets purchased directly by travelers will not attract TCS. The finance minister has planned an expenditure of Rs 2,400 crore for the tourism sector in 2023-24. This equals the 2022-23 budget allocation. In the revised budget estimate for 2022-2023, the allocation has been reduced to Rs 1,343.13 crore. The tourism sector has been included as one of the priority areas, with Sitharaman stating that “the promotion of tourism will be undertaken on a mission mode with the active participation of states and through public-private partnerships (PPPs)”. Sitharaman said at least 50 destinations will be selected in “challenge mode” and the overall tourism experience will be developed with physical and virtual connectivity. “Each destination would be developed as a complete package. The emphasis on tourism development would be on domestic and foreign tourists,” Sitharaman said in his speech. Equipment will also be developed in border villages. Additionally, states would be encouraged to establish a Unity Mall for the promotion and sale of GIs (geographical indication) and other handicrafts. The industry expressed mixed feelings about the budget as some of the demands for tax breaks or industry status were not addressed in the budget. “The budget involves multiple welcome initiatives such as the relaunch of 50 airports, the construction of 50 new destinations, and heavy budget spending on railways and highways that will contribute to the long-term growth of the travel industry and domestic tourism,” said co-founder Rajesh Magow. and Group Managing Director, MakeMyTrip. “However, one proposal that will negatively impact the industry is the decision to increase the TCS mandate from 5% to 20% on overseas package tours. This will not only increase upfront cash flow for customers, but will give an unfair advantage to overseas-based online travel booking platforms over India-based travel agents and tour operators,” Magow added. “This proposal must be canceled immediately,” said Rajiv Mehra, president of the Indian Association of Tour Operators. “This will kill local travel agents’ business and force customers to bypass us and book overseas directly, resulting in a loss to the treasury,” remarked Guldeep Singh Sahni, former chairman of Outbound Tour. Operators Association of India.