Hospitality players hope for service tax exemption in Budget

The hospitality and tourism industry is pinning hopes on the Budget providing service tax exemption and boost to digital and physical infrastructure.

Hospitality and tourism are among the largest employment generators and the third largest foreign exchange earner. They contribute close to 7.5 per cent of GDP. Factors that drive the industry are increased travel spending among millennial due to rising disposable income and affordable air fare.

International brands are also seeing an exponential growth thanks to expansion of the e-visa scheme.

According to Debanjan Kundu, Director of Sales and Marketing, Ritz Carlton, recent trends have resulted in definitive rise in spending capacity and aspiration for premium brands and luxury hotel brands in India.

The hospitality sector players feel service tax exemption and relaxation in income tax slabs for salaried class will go a long way in improving tourism. “In addition to tax exemption, infrastructure is the cornerstone to the growth of the hotel industry and measures to support infrastructure will bolster our industry,” Kundu added.

GST issue Jean-Michel Cassé, Senior Vice-President, Operations, AccorHotels, India said single window clearance, implementation of Goods and Services Tax Bill and friendlier taxation for airlines and passenger surcharges will further improve the industry.

“Implementation of the highly anticipated GST Bill will eliminate multiple levels of taxation, standardise business practices and further reorganise the lengthy approval process that will potentially speed up the project execution in the hospitality sector,” he added.

Currently, the Indian consumers pay double tax on outbound holidays as they have to pay service tax in India and also local GST/VAT of the visiting country. Tour operators feel that imposing tax only on Indian component of the tour will reduce tax burden on the Indian travellers and increase spending. Anil Khandelwal, Chief Financial Officer, Cox and Kings, said the government should fix GST rates taking into consideration GST/VAT being levied by neighbouring countries.

Overseas travel hit After demonetisation, the travel and hospitality industry were one of the worst affected industries with many cancellations and drop in bookings. It especially hit foreign exchange as many overseas travellers cancelled their trip due to cash crunch.

At this juncture, Aurvind Lama, Chief Executive Officer and Co-founder of travel start-up Travelyaari, said the government needs to implement measures to boost cashless transactions across the country that will help make travelling across the country faster and easier.

Investment in modernisation and cyber security will go a long way in building robust digital infrastructure and promote tourism in the long run, Lama added.

COMMENT NOW