Tour operators want Arun Jaitley to exempt service tax on foreign exchange during inbound trips

The tour and travel industry has sought for exemption on service tax on foreign exchange earned on inbound tours in the upcoming Budget 2017.

The industry wants Arun Jaitley to announce lower tax rate and fix the GST rates for the sector.

"Travel and tourism is one of the highest foreign exchange earners for the country. The industry is expecting that there will be exemption of service tax on foreign exchange earned by tour operators for inbound tours," Cox & Kings Ltd CFO Anil Khandelwal told PTI.

He further said paying of double tax on outbound tours must be also ended.

Currently, an Indian customer pays double tax on outbound holidays for the overseas part of the trip due to service tax in India and also local GST/VAT of the visiting country, he said.

"The service tax/GST should be levied only on the Indian component of the tour," Khandelwal said.

Thomas Cook India Group Chairman and Managing Director Madhavan Menon said: "Strengthening 'Incredible India' brand through the creation of tourist circuits, key infrastructure and rail-roadways, is mission critical."

Effective marketing to position India as a top leisure and MICE destination is also of prime importance, he added.

"The tourism industry is one of the largest and most dynamic sectors globally, accounting for more than a third of the total services trade.... Keeping this in mind, we are hopeful that the upcoming Union Budget will provide a vital and much needed boost to the sector," Menon said.

OYO Founder and CEO Ritesh Agarwal said considering the government's focus on speedy implementation of digitalisation for long-term economic growth, "all eyes are now on the Union Budget for clarity on taxation policy and regulatory issues, and fixing norms for the credit guarantee scheme. We hope to see supportive policies for the travel and tourism sector."

He said additional incentives should be provided for infrastructure investments in the travel and tourism sector to accelerate growth.

"A lower tax rate for hospitality business and lower rate of interest for real-estate development will ensure opening up of more supply for the nascent branded budget hospitality sector," Agarwal added.