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Industry expects sops from Budget 2013-14

The main wishlist includes industry status for the tourism sector, complete infrastructure status for the hospitality sector and reduction in service and luxury taxes. So far, the word ‘tourism’ has never been given a place in the Union Budget despite tourism being one of the main forex earning mediums for the country.

The Indian Association of Tour Operators (IATO) is advocating for the physical exports industry status for the tourism sector. “Our main demand is that tour operators should be treated at par with physical exporters because they are exempted from service tax on the basis of their forex earnings,” Subhash Goyal, President, IATO, said. According to him, 90-95 per cent of the forex earned by tour operators remains in India, while 60-90 per cent of the forex earned by exporters of gems, jewellery and carpets is spent on imports of gold, precious stones and wool and other raw materials. “This discrimination of the service exporters vis-a-vis the physical exporters must be stopped. This can only be done by bringing tour operators at par with physical exporters,” Goyal added.

The Association of Domestic Tour Operators of India (ADTOI) has similar demands. “We only have three requests from the government this year. We have seen no mention of tourism in the last few years in the budget and no recognition of the sector as an industry or an employment generator at all. We want that to change this year. Secondly, the higher service tax in various aspects of the sector is a matter of great concern for the tourism industry. The government should relook at the same and make the necessary changes to ensure that travel and tourism is less cumbersome a business to run,” Subhash Verma, President, ADTOI, said.

Verma also seeks some sort of incentive for domestic tourism. “When a family travels within the country, some incentive or tax rebate should be given to them to encourage more domestic footfall. The service tax is an issue that has been discussed extensively in the last year and we are hoping for some improvement on that issue at least in this year’s budget,” he wished.

The Travel Agents Association of India (TAAI) also has high expectations from the coming Budget. “Expectations from this year’s Budget are very high. Tourism has not been given importance at all in the last five to six years. In fact, it has continuously been slapped with taxes. Now bearing in mind the current scenario of the economic slowdown and aviation problems, we request the government to take the necessary measures to ensure the survival of the tourism industry. ATF and UDF need to reduce and costs need to be lowered for travel agents as well for smoother business,” Iqbal Mulla, President, TAAI, opined, and requested the Government to lower taxes in order to increase inbound numbers.

The hotel industry is also hoping for an industry friendly Budget this year. Last year, three and four star properties located outside cities with population of more than one million in the harmonised list of infrastructure sub-sectors. In addition, they provided a reduction in taxes by providing tax credits and allowed 100 per cent deduction to the franchise model.

However, the hotel operators within city limits were not happy with the decision and hope that this year’s Budget brings the sector some good news. The Federation of Hotel and Restaurant Associations of India (FHRAI) feels that the government and all other stakeholders must get involved to prepare a long term strategy that positions India as the preferred destination among business travellers as well as tourists.

“The proposal to grant hotels the infrastructure status has been in the news for many a decade. The benefit of the infrastructure status should be given to city hotels as well as the entire tourism sector as extended to other Infrastructure projects such as airports, ports, roads etc. so that hotels would not have to face the challenge of availing financial assistance. This would enable hotels to reduce their payable interest rates,” Garish Oberoi, Vice President, FHRAI, stated. According to him, GST should be implemented at the earliest. “If the GST is not brought in, this shall remain the biggest challenge for the industry. The quantum of GST should not be more than eight per cent keeping in view the taxation of neighbouring countries in order to position India as a competing tourism destination,” he opined.

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