Indian tourism and hospitality industry puts forth its proposals for Union Budget FY21-22

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Setting up of a national tourism council, offering specific tax benefits and cuts in GST, setting up of funds for sustainable development of tourism and having a national transportation policy; these were some of the Union Budget FY 21-22 proposals put forth by an umbrella body of organisations that represent tourism and hospitality industry in India.

The objective: to double India’s share of inbound tourism in five years and to double India’s size of domestic tourism to almost 4 billion domestic tourism visits in five years post normal, said the proposal by Federation of Associations in Indian Tourism & Hospitality (FAITH), which represents ten major travel and hospitality organisation of India. “National Tourism Council is required since tourism encompasses multiple ministries and takes place in and within states. National Tourism Council must be chaired by the PM and co-chaired by the Tourism Minister and composed of Chief Ministers of all states and cabinet ministers of Government of India and must be a legislative body on the lines of GST council,” said the proposal sent by FAITH.

Another issue taken up was about the “concurrent industry status”. It is required for hotels and tourism across all states as unlike commercial establishments tourism and hospitality doesn’t just retail but creates and produce high quality service, said the proposal. “Power and water utility rates and levies must be at industrial rates effectively. All existing licenses, permits, permissions will be thoroughly examined for redundancies and standardized at a national level. There must be a level playing field in terms of compliances and entry requirements among all sub segments of conventional and alternate tourism organise the travel industry and protect it from fly by night operations,” it said.

When it comes to domestic tourism, the budget proposal put forth by FAITH set a target to double it to almost 4 billion domestic tourism visits in five years post normal. Among the steps suggested to boost tourism in the long term was the setting up of a Natural & Cultural Heritage Restoration Fund with a corpus of at least Rs 2000 crores, said the proposal. The said Fund was needed to encourage sustainable and responsible development around each vertical of natural and cultural heritage tourism like for instance, mountaineering, cruising, trekking, wild life and reserve forests based activities, snorkelling, para gliding, whitewater rafting, conservatories, para gliding, ballooning, desert safaris in natural heritage or palaces, forts, monuments, museums etc, said the FIATH proposal. Another fund proposed was for MICE tourism. “Global MICE Bidding Fund is required to be setup of Rs 500 crore to double MICE share to 2.5% of the global MICE size of $ 800 bn. In the global international congress associations rankings, this will also enable to meet the goal will be to take India’s rank to the top 10 in the world from 28 where we are currently,” it said.

A national tourism transportation policy must be laid out to ensure seamless tourist transportation experience. It is needed to standardise all inter state road taxes and make them payable at a single point which will facilitate the ease of doing business, said FAITH. There should be an income tax exemption on travelling within India with income tax credits for upto Rs 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country, it said. “It is also needed to incentive Indian corporates to undertake domestic MICE (meetings, incentives, conferences & events) by offering a 200% weighted income tax expense benefit to Indian companies which are undertaking mice events in India,” said the proposal. Apart from this there were certain policy issues which needed to be addressed for tourism GST, said FAITH.

“The 18% GST category for hotels above room rates of ₹ 7500 must be abolished and merged with the category of 12% GST. Restaurants too have an 18% and also 5% slab but which is without setoffs. The 18% category needs to be abolished and there needs to be an option made available of GST at 12% with full set offs. Additionally, the needs to be no linkage to room tariffs above ₹ 7500 as it currently exists,” it said adding that taxes on fuel, Inter- state transportation taxes, power cess, liquor excise and also property taxes, cess on parking charges, are all forms of very high cost input indirect costs on tourism, travel & hospitality. “These need to be made available as input costs setoffs for GST to truly make us one country, one tax,” it added.

“The GST on tour operators should be 1.8% with full set offs. Hotels need to be able to levy IGST to enable them to give GST credits to Indian corporates who do Interstate events and do not take these events international. This will streamline the complete GST chain and boost interstate corporate mice demand for hospitality,” it said adding that 100% tax exemption and permission to write back income / TDS/ GST etc when airlines windup or closedown must be provided for. “TCS must be abolished, as it is an additional compliance hazard. Reduction in credit card processing charges by banks/ financial institutions is key towards 100% e-payments. It is important to bring overseas global OTA’s operating in India into the tax net of GST and other taxes. The implementation of these measures will put Indian Tourism on the line of vision of Tourism – Made in India,” said FAITH.

One of the factors critical to doubling the India’s share of inbound tourism to 2.5 % in five years is export status, it said. “It is key to treat at par foreign exchange earning members of tourism, travel and hospitality under export and deemed export status to promote forex earnings. It is important to make available the deduction in respect of earnings in convertible foreign exchange to all the tourism and hospitality units earning. Tourism forex earnings should be effectively zero rated for GST,” it said.

Source from: https://timesofindia.indiatimes.com/business/india-business/indian-tourism-and-hospitality-industry-puts-forth-its-proposals-for-union-budget-fy21-22/articleshow/79319919.cms

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