Govt must reduce tax burden on tourism industry

To give greater emphasis on tourism in the upcoming budget, industry body ASSOCHAM has recommended the government to reduce tax burden on the industry. The chamber also suggested that the government should work towards setting up tourism circuits around different themes, in order to attract larger number of foreign tourists in the country.

“Launch projects to create 50 tourist circuits around themes of Heritage, Culture, Himalayas, Desert, North East Region, Coastal, Sports and Films. Create a Hindu Circuit akin to Buddhist Circuit; explore synergy with North East, SAARC and South East Asian countries which have a strong ‘India’ connect,” said DS Rawat, general secretary of ASSOCHAM.

Commenting on the issue of multiple taxes, Subhash Goyal, chairman of STIC Travel Group and President of Indian Association of Tour Operators (IATO), stated that the industry expected relief once the Goods & Services Tax (GST) is implemented.

“The problem is that tourism is not treated at par with other export-based sectors. While sectors that export goods are exempted from service tax, the tourism industry, which is a part of service sector, is made to pay the service tax. We want the government to treat us as other foreign currency earner,” stated Goyal.

He further added the government must focus on reducing the taxes on aviation turbine fuel (ATF) as it has made airfare in India expensive, which has adversely impacted the sector.

According to Goyal, since the tax paid on ATF varies in different states, hence, the implementation of GST becomes although more imperative. “The government should restrict the tax levied on ATF to a maximum of 5% as anything more than that can make air travel in India expensive, thus benefitting other Southeast Asian destination such as Thailand, Singapore, Indonesia and Malaysia, which are more cost-competitive,” noted Goyal.

Addressing the issue of shortage of room inventory in the major tourist destinations, the chamber stated that the government should focus on finding ways to increase the number of budget hotels for more room inventory.

“The government should accord ‘Infrastructure’ status for hotel projects with minimum 50-100 rooms (from current cost-based criteria of Rs 200 crore) and reduce availability constraints by expanding mid-segment hotels of 2-3 star categories,” added Rawat.