Do Indian Passport holders need Transit Visa for Zurich if final destination is Spain?

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No. A Schengen visa allows you to enter anywhere in the Schengen area. Zurich is in Switzerland, which is part of the Schengen area. Hence, you will enter the Schengen area in Zurich. Your flight to Spain will be a Schengen internal flight, so you likely won't have your documentation checked by any officials in Spain (there are no routine checks, but it is possible checks can be randomly carried out).

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