After re-analysisng the impact of COVID-19 on travel, tourism and hospitality sectors, Industry chamber Federation of Indian Chambers of Commerce and Industry has revised its recommendations for the sector to the government. T3 reproduces the revised recommendations here:
· While the industry has received the moratorium for 3 months, however the industry needs a minimum of 1 year moratorium on all working capital, principal, interest payments, loans and overdrafts.
· Collateral & interest free loan upto 5 years for SMEs in tourism which will help them sustain and rebuild.
· A deferment for twelve months of all statutory dues with respect to license fees property tax and excise fees.
· Bail out packages to fund and support the salaries in the Tourism and Hospitality Sector.
· A deferment in the increase of insurance premium for 12 months such as standard fire and special perils rate for fire, loss of profits.
· Deferment of GST & Advance Tax payments at the Central Government level and removal of Fees for any upcoming licenses, permits/ renewal.
· SGST is requested to be waived off till the time the situation becomes normal.
· Export status for foreign exchange earnings for inbound tours and hotels.
· Incentivise the Indian corporate for holding meetings & conferences in India with 200% weighted deduction of these as tax expenses against GST invoices.
· Incentivise Indian citizens through LTA like income tax benefits for holidaying within India. These could be a deductible expense (for eg of upto ₹ 1.5 lakhs) against GST invoices.
· Lending to tourism sector to be treated as priority sector lending at least for next one year which will enable access to bank finance.
· Advise Credit Rating agencies to maintain standstill on the ratings assigned businesses over the next 6-9 months, due to the expected volatility of the business in the short to medium term.
· Permit sanctioning of additional facilities in the form of Working Capital Term Loan for meeting cash flow mismatches during the period affected by COVID-19. The tenure of such facility shall be assessed based on the individual project cash flows. Such additional facilities to be treated as standard assets.
· In case of projects under implementation, the Banks/ Institutions/NBFCs be permitted to extend the DCCO by 1 year without treating it as restructuring, as it would be difficult for the promoters to raise funds from other business/services for project completion.
· Amendment to Master Direction (Relief Measures by Banks in Areas affected by Natural Calamities) Directions 2018 – SCBs.
· To include COVID-19 in the definition of Natural Calamity and permit use of this circular for Tourism Sector.
· To enable NBFCs to use this circular (presently only applicable to Banks).
· To remove additional provisioning requirement for the restructured portion of Loans under this scheme.
· With the fall in oil prices, subsidies on Heat-Light-Power (HLP) costs should be extended, as HLP is among the largest fixed cost for the sector.
· Restore SEIS scrips for duty credit of 10% to Tourism industry.
· Services Export Promotion Council (SEPC) Membership to be extended till 31st March 2021.
· Directorate General of Foreign Trade (DGFT) to approve all completed form within 30 days so to utilize the cash flow to pay salaries and expenses.
· Finalize an aggressive Incredible India marketing plan during lockdown and implement on opening. This will drive traffic to India.
· Foreign guest to pay same price as Indians for monuments. Excellent optics and reduced tour price with low cost impact to the country.
· Zero visa fee for one year.
· No Landing fees for Goa: Charters land for free – this will encourage flights to come back and companies will spend their marketing dollars in promoting the destination. Goa has one case today – this destination has potential to bounce back from UK, Russia and Scandinavia.
· Electricity and water to tourism & hospitality units should be charged at a subsidized rate and on actual consumption against fixed load.
· GST rates on hospitality should be slashed for at least two or three years, since, currently, large hotels are charged a GST rate of anything between 12 and 18% based on room rate charged. Now that hotels are almost empty, the GST rate should be brought down to 5 or 6%, with immediate effect.
· Export Promotion Capital Goods (EPCG) scheme to consider grant of extension in export obligation fulfillment period by an additional three years beyond 6 years for all the licenses expiring during current and next 2 financial years, without attracting any penalty or interest.
· Indian Heritage Hotels is a unique product of Rural India and it is another side of coin of Rural Tourism. For sustainability of this unique product, there should be a special package for the survival of heritage hotels.
Online Travel Agents (OTAs):
· Short term interest free or low interest loans for rebuilding business and immediate transmission to all independent travel agents, tour operators and Online businesses in the form of Term loans and Working Capital loans. Besides, existing overdraft limits can be doubled for the industry and immediate cash relief to be given to avoid mass lay-offs of employees.
· GST Holiday: For the revival of travel agency sector a GST holiday for Tour packages and all of reservation services rendered by travel agents in line with the tax holiday requested for civil aviation and hospitality sector, is required.
· TCS exemption under GST: OTAs are liable to collect TCS @ 1% under GST while remitting payments to airlines and hotels. TCS compliance contributes significantly towards working capital needs of the OTA sector and would also impact airline and hospitality sector if a tax holiday under GST is considered for them. Therefore, we request TCS exemption for OTAs in line with GST holiday granted to airline and hospitality sector. Estimated TCS liability for entire OTA sector would be INR 460 Crores.
· TDS by OTAs under Income Tax: Budget 2020 proposed a new TDS levy similar to TCS under GST law, whereby OTAs are required to withheld 1%/5% TDS while remitting payments to airlines, hotels etc. Keeping in with the fact that entire industry is heading towards a loss year, the proposed provision should be rolled back.
· TCS on sale of Overseas Tour Packages: The proposed TCS on sale of overseas packages in the Finance Bill 2020 is detrimental to tourism business in India. The proposed TCS will not only increase the cost of packages sold by Indian tour operators, it will also shift all sales of outbound tourism to overseas suppliers denying the government of all Income tax and GST revenue. Therefore, in order to allow domestic tour operators a level playing field and a chance to revive their business, it is recommended that proposed TCS should be rolled back.
(Payments of other statutory liabilities by Travels Agency Sector which should be deferred are as given below:
a. TDS under income tax including Salary TDS: INR 1,570 Crores
b. PF and ESI deposit including employee contribution: INR 446 Crore
· Waiver of Custom Duties on Import of Spare Parts: Waiver on custom duties on import of spare parts to bring down the repair and maintenance cost.
· Reduction of Effective Rate of Interest on Loans from Financial Institutions: Reduction by 200 basis points in effective interest rate being charged by financial institutions on term loans, working facilities and other facilities with immediate full transmission for working capital to reduce the burden on cash outflows.
· Fiscal Support for Salaries: Support fund for 12 months on the lines of MNREGA to support basic salaries with direct transfers to affected amusement industry employees.
· Concessional Pricing for Water and Electricity: Provision of water and electricity to the amusement industry for 6 months on concessional and subsidised rates.
· Lower Rate of Income Tax and Early Settlement of Income tax Refunds: To enhance the cash inflows and reduce the cash outflows to support.
· Reduce high interest rates on credit cards and fee charges to work on credit cards. Industry status to be given to the Travel Agents to work much better with data system.
· Direct the Employee State Insurance Corporation to pay the entire wages of the employees of those units that are covered under ESI for the period our country is under lock down. As COVID-19 has caused a medical disaster ESI is very well justified in meeting this commitment of employees.
· Humble request to kindly categorize us as Amusement Park industry and not entertainment park – as we engage kids and youth along with their families in
· physical activities through outdoor / indoor rides, games which are filled with thrills, fun and joy and are also educative.
· Wavier of minimum/fixed cost charges levied by electricity department (as exempted for industries by the state of Maharashtra, Gujarat, Uttar Pradesh, Punjab)
· Waive off property tax/non agriculture tax /gram panchayat tax of Amusement Park/Water Park/Theme Park as it is developed across huge land parcel for the period of 12 months.
· Extend all existing licenses without charges for one year.
· Complete GST Holiday for 12 months: To make the entry prices economical to attract the patrons, complete holiday for 12 months (Central and State level).
· Support Fund majorly for salaries and establishment Costs through the following:
- Govt. to Contribute to 33.33% of the salaries to all employees of
- registered travel agencies.
- Govt. to use funds of ESIC to pay salaries of employees covered under the scheme.
- No deduction of TDS on salaries for employees of the trade for upto March’21.
- 160% exemption on salaries/wages will boost up working capital effective FY 2019-20, to save job retention.
- Subsidize Electricity by 33.33% : This will give relief to 53000+ Travel agents, 1.3 lakhs+ tour operators (domestic, inbound, adventure, cruise, outbound), 2700 + mice 19 lakhs + tourist transporters, etc
· PF contribution needs to be waived off for all categories of employees for the next 12 months.
· Employees to be allowed to withdraw for upto 6 months from the EPF accounts a fixed sum of Rs. 10,000/-.
· ESI contribution needs to be deferred for 12 months. The insurance corpus of ESI needs to be used now provide paid wages relief to all organised workers for all accumulated days from non availability of work and the act needs to be amended immediately as the PF act was done.
· Professional Tax to be waived for all companies as well as employees upto March'21.
· Refunds of cancellations and advances of travel agents & tour operators from AIRLINES/IATA: MOT & MOCA immediately advises them to refund. Advances/float accounts also to be refunded in full immediately as they are of money in float/advances for not issued tickets.
· Billing period for IATA carriers to be extended to 15days. MOCA should underwrite these payments to travel agents & tour operators which will be securtised against these receivables from IATA and low cost carriers/ non-iata airline.
Complete GST & Income tax holiday for tourism, travel and hospitality industry for period of twelve months:
- IT Holiday effective FY19-20.
- Reseller model for Airtravel Agents to be permitted for corporates/ customers with GST number with the Agents directly on payment basis since airlines don’t pay on payment / receipt basis and credit GST only on flown basis.
- Unlock interhead credit of GST across IGST, CGST, SGST for Tour operators. Permanently allow tour operators to claim IGST for hotel reservations/other services interstate basis as input credit to claim ITC.