Since the past few years travel and tourism industry has emerged as one of the major economic drivers in the country, yet the government fails to acknowledge the importance of tourism and seldom includes it while allocating the Union Budget. High taxation and industry status have been the industry’s demand for time immemorial, but has faced ignorance year after year.
Budget 2012-13 addressed the immediate concerns of the aviation sector through external commercial borrowing (ECB) and ignored the travel and tourism industry as a whole. It created an uproar among the travel fraternity that the industry which is the largest employment generator in the country was not given the importance it deserves. In 2013, once again the budget did not fail to disappoint.
The Federation of Association in Indian Tourism & Hospitality (FAITH) members have deliberated among themselves and have come out with common proposals for Union Budget 2014-15 and submitted to the Ministry of Finance. In a recent letter to Parvez Dewan, Secretary, Ministry of Tourism, Sarab Jit Singh, Vice Chairman, FAITH has requested him to take certain points into consideration, while making the ministry’s budget proposals to Ministry of Finance. “This is the first ever effort by the travel, tourism, transport and hospitality industry that we put the proposals together and we are certain that this single voice will definitely have its impact,” Singh said.
TAAI continues to face disappointment for tourism not being granted the industry status, for which it has, along with other associations, made pleas to the Finance Ministry in the past. “Last year, the Finance Minister talked about rationalisation of direct taxes and efforts to fast track the GST rollout, and we hope that this year he will address our demand of easing out service tax complexity and ambiguity in the travel and tourism industry. Among other pending issues not addressed in the budget are the rationalization and reduction of taxes on ATF, tax concessions to tourism industry for infrastructure spending, fast track and single window clearing system for tourism and hospitality projects etc. Also interstate taxes for tourist transport vehicles should be abolished,” Iqbal Mulla, President, Travel Agents Association of India (TAAI) opined.
In the 2014 Budget, Zakkir Ahmed, President, Travel Agents Federation of India, is hopeful that the Government will reduce service tax and grant tourism with industry status. “Tourism sector is estimated to contribute more than 6 per cent to the GDP. Although we earn foreign exchange for the country besides the hospitality sector and other tourism-related service providers, we do not get any benefits, unlike those extended to other service exporters, who earn foreign exchange; we hope that the Government will consider us this year. Last year the proposed increase in service tax to 12 percent acted as a dampener for the growth of the sector as it resulted in spike in costs.”
According to Subhash Goyal, President, Indian Association of Tour Operators (IATO), tourism is getting priority in Government’s Plan Process due to its potential for foreign exchange earnings, job creations, balance of payment, national integration and foreign investments. “We are keeping our finger crossed that there will be increased outlay for tourism activities with tax incentives. We always keep a positive and optimistic mind so far as Budget outcome is concerned. But looking into the economic position and ad-hoc budget from six months to tide over urgent government expenses, and National Election in February/April, there could be cut in over all allocation. Tourism needs robust outlay for improving basic infrastructure and aggressive marketing to counteract the negative image and negative publicity India got recently,” he said.
But not everyone has been disappointed with the budget. Rajeev Wagle, Managing Director, Kuoni India, was in favour of the Budget 2013-14 and is optimistic for 2014-15 as well. “The Budget was very practical and stays steadfast to the path outlined by the Finance Minister towards fiscal consolidation. With major tax reforms like DTC and GST on the anvil, we can expect buoyancy in tax revenues in future,” he said and added the travel industry looks forward to growth oriented Budget to improve its fortunes in the year. The expected global economic improvement in 2014 will set the scene for another positive year for tourism.”
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