Govt's revised LTA plan to boost South Asian tourism, amendment in IT Act likely

The move, will be applicable for govt employees travelling to Sri Lanka, Maldives, Nepal and Bhutan

With the government planning to include four South Asian Association of Regional Cooperation (Saarc) countries in the leave travel allowance (LTA) scheme for its employees, an amendment to the Income Tax Rules of 1922 is likely on the cards.

The move, intended to boost tourism in the region, will be applicable for government employees travelling to Sri Lanka, Maldives, Nepal and Bhutan.

Foreign tourist arrivals (FTA) from these four countries have been decreasing for a few years now. But, with this move, the government expects a form of reciprocal arrangement, sources in the ministry of tourism said. Discussions are underway to work something out.

While this move is likely to increase the number of Indians travelling within the South Asian region, any adverse impact on domestic tourism will be marginal, according to analysts. The plan is to capitalise on the two million people the government employs and set off a high growth tourism cycle.

“Before this can translate into employees’ reimbursement, the Rule 2B of the Income Tax Rules of 1922 would need to be amended,” said Divya Baweja, partner, Deloitte Haskins and Sells LLP.

Currently, the Rule 2B of Income Tax Rules specifies that travelling within India will be eligible for employees’ LTA reimbursement.

“Outbound travel is definitely going to increase with this move. Maldives and Sri Lanka are likely to see the highest influx once this comes in,” said Guldeep Singh Sahni, president, Outbound Tour Operators Association of India (OTOAI).

While LTA covers the air fare, the cost difference is also unlikely to be high between some of the Indian destinations and Saarc nations.

“On the expenditure side, the difference in economy classes of air ticket prices will be quite minimal,’’ according to Sahni.

In the 18th Saarc Summit held in Nepal last November, Prime Minister Narendra Modi had talked about the need for increasing connectivity in the region. "It is harder to travel within our region than to Bangkok or Singapore," Modi had observed.

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