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Tourism sector expects simple tax, industry upgrade

Demands infrastruture sector status for hotels, industry status for tourism

Arijit Paladhi  |  New Delhi 

The tourism and hospitality sector is expecting simpler taxes and better infrastructure from the upcoming Union Budget. “We want a simplified tax structure. The CENVAT credit for services benefiting from an abated tax rate, applicable to rent-a-cab services and tour operators, needs to be expanded to all travel-related services,” said Rakshit Desai, managing director, FCm Travel Solutions and Flight Shop. The sector is also lobbying for the lowest slab in the goods and services tax (GST). “Our foremost demand is to be treated on a par with exporters and exempted from service tax entirely. We also seek the lowest slab in GST because of our industry’s ability to create so many jobs,” said Subhash Goyal, president, Indian Association of Tour Operators.

To promote tourism, the government has introduced e-visas for 43 countries. However, progress on developing tourist circuits, pilgrimage site rejuvenation and heritage city development has been slow. Read our full coverage on Union Budget

  • Taxation structure changes — abatement of double taxation
  • Grant of infrastructure and export industry status to the hotel industry
  • Declaration of tourism as an industry
  • Infrastructure upgrade at high-traffic tourist destinations
  • Single-window clearance for new hotel projects
  • Implementation of plans to develop newer areas and tourist circuits

Greater impetus on tourism is expected in this Budget, according to Vikram Malhi, managing director (Asia), Expedia. Infrastructure at tourist destinations should be a priority, he added. The Federation of Indian Chambers of Commerce and Industry (Ficci) has recommended granting Industry status to tourism and Infrastructure status to hotels. “Tourism should be included in Schedule 1 of the Industries Development Act, 1951, and state governments be requested to recognise tourism as an Industry,” said Ficci. Tamil Nadu, Kerala, Uttar Pradesh, West Bengal, Arunachal Pradesh, Uttarakhand, Sikkim, Jammu and Kashmir, Jharkhand, Haryana and the Union Territory of Daman and Diu, Dadra and Nagar Haveli have accorded industry status to tourism. In the hotel industry, benefits available under Section 80HHD of the Income Tax Act discontinued after 2005-06 should be revived, according to Ficci. “That will enable further investment in this sector,” it added.

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First Published: Tue, February 10 2015. 00:45 IST