(S. DURAIRAJ, ADVOCATE)
1. Haj & Umrah pilgrimages are mandatory religious duties to be undertaken by Muslims. For many of the pilgrims, Haj is once in a lifetime pilgrimage and they undertake the pilgrimage by taking out the savings made over a lifetime, in many cases especially for this purpose. Those, who cannot afford Haj, are taking Umrah Pilgrimage, which costs lesser than Haj.
2. As per the Holy Quran, pilgrimage involving many rites and rituals to Makkah and nearby holy sites in Kingdom of Saudi Arabia is a duty to God for all who can make the journey. There are two types of such pilgrimages prescribed in the Quran as under:
i) Haj is a five-day religious pilgrimage. It is one of the five pillars, or duties, of Islam as per the Holy Quran. Haj takes place only once a year i.e. in the 12th and final month of the Islamic lunar calendar.
ii) Umrah may be performed at any time of the year.
3. Haj can be undertaken only under a bilateral agreement between the Government of India and the Kingdom of Saudi Arabia. As per the said agreement, a fixed number of visas are allotted to Hajis from India. Out of the total number of Haj visas allotted to India, approximately 30% are allocated to Haj Group Organizers [HGO], while the rest are reserved for Haj Committee of India (hereinafter referred to as HCOI). HGOs are issued licenses by the Government of India [Ministry of Minority Affairs] subject to such terms and conditions as may be prescribed in the Haj Policy issued by the Ministry of Minority Affairs. Pilgrims cannot directly undertake Haj except through Haj Committee of India or HGOs.
4. Pilgrims should apply for Umrah visas through approved Umrah travel agent of the Kingdom of Saudi Arabia, who has entered into an agreement with the HGO in India.
5. Such mandatory pilgrimage to be undertaken by capable Muslims is highly regulated. High standards and stringent conditions are set by the Ministry of Minority Affairs to obtain registration as a HGO. HGOs play a vital role in organizing and conducting the same with the coordination of the authorised service providers/suppliers in Kingdom of Saudi Arabia and Haj Committee of India, Ministry of Minority Affairs. This involves a number of activities from training the pilgrims to being entirely responsible for the transportation, accommodation and payment of mandatory charges to the Kingdom of Saudi Arabia.
6. Section 206C(1G)(b) of the Income Tax Act, 1961 states that tax should be collected at source by a seller, who sells an “overseas tour programme package” to a buyer. By way of explanation to the aforesaid sub-section, “overseas tour programme package” has been defined as follows:
i) “overseas tour programme package” means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
7. While this is being so, my bona fide view is that this provision is inapplicable for Haj & Umrah pilgrimages for the following reasons.
7.1 Section 139 of the Income Tax Act, 1961 mandates a person, who has incurred expenditure for travel to a foreign country, to file a return of income within the due date. Explanation 3 of this section states that the expression “travel to any foreign country” does not include travel to the neighbouring countries or to such places of pilgrimage as the Board may specify in this behalf by notification in the Official Gazette. Accordingly, the following notification was issued by the Board.
NOTIFICATION NO 147/2001 – Dated: June 11, 2001
Sub: Section 139 – Places not considered as travel to foreign country.
In exercise of the powers conferred by Explanation 3 to sub-section (1) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby specifies the following places as the places of pilgrimage and travel to such places shall not be regarded as travel to any foreign country for the purposes of the said sub-section, namely:
- Travel to Saudi Arabia on Haj pilgrimage organized by the Central Haj Committee, Mumbai constituted under the Haj Committee Act, 1959;
- Travel to China on pilgrimage to Kailash Mansarover organized by the Ministry of External Affairs, Government of India.
(Batsala Jha Yadav)
Under Secretary to the Government of India
7.2 Section 2(27) of the Merchant Shipping Act, 1958 defines that “pilgrimage” means pilgrimage to any holy place in the Hedjaz or to any other place declared by the Central Government to be a place of pilgrimage by notification in Official Gazette. The Indian Parliament has already decided that travel to any holy place in Hedjaz [now part of Saudi Arabia] is a pilgrimage.
7.3 The outcome of the combined reading of the explanation of “Overseas Tour Package” in Section 206(C)(1G)(b), Explanation 3 in Section 139 and the notification issued under this Section and Section 2(27) of the Merchant Shipping Act, 1958 is that such pilgrimages cannot be considered as an “overseas tour package” so as to attract TCS.
8. Now, Central Haj Committee, Mumbai is not organizing any Haj pilgrimage. It is being organized by the Ministry of Minority Affairs through Haj Committee of India and Haj Group Organizers under bilateral agreement with Kingdom of Saudi Arabia. It is also pertinent to mention here that Haj Committee Act, 1959 as mentioned in the above notification was also repealed by Haj Committee Act, 2002. Therefore, the above said notification is to be reconsidered for the above reasons especially by considering Section 2(27) of the Merchant Shipping Act, 1958.
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