- Date : 29/01/2024
- Read: 3 mins
A look at some of the key expectations related to the tourism industry from the interim budget 2024
While an interim budget normally avoids any major policy change declarations, it is not unwise to expect a few proposals in key areas. When it comes to the travel and tourism industry, steps to streamline the direct and indirect taxes on the industry, along with reductions in the tax burden, are key among the expectations.
The model code of conduct restricts interim budgets to make sweeping changes
Tourism is expected to contribute $250 billion to the country by 2030, while employing 137 million individuals
The stable economic condition is making conditions conducive for the tourism industry
Encouragement to tourists
Some of the areas where the finance minister can help the tourism industry are:
Infrastructure status - The tourism and hospitality sector can benefit from the grant of an infrastructure status, much like sectors such as highways and ports. By doing so, the states would effectively grant manufacturing industry benefits to hotels and hospitality players. These benefits include reduced utility tariffs and property taxes, and better access to soft loans and other sources of finance. This will reduce the capital cost for the industry, and lead to faster project completions and better finances.
Annual LTA - Tourism is dependent on the availability of disposable income to the citizens. A reduction in direct taxes directly increases the cash in hand for the common person, resulting in a surge in tourism. Industry experts suggest that changing the Leave Travel Allowance from twice in four years to an annual affair will encourage domestic tourism.
TCS standardisation - Travel service providers are subject to a slab-based Tax Collected at Source (TCS), in the 5-20% range on foreign tour packages. This puts the domestic players at a disadvantage against international competitors. The latter is not under the purview of this TCS rule. Streamlining this to a flat 5% will benefit the overseas travel service providers in India.
TDS removal – The industry has also recommended the removal of TDS from automated bookings. Presently, it applies to internal or closed user groups like business travel platforms.
GST-related steps – Availability of GST input credit for domestic and inbound tourism, along with a centralised issue resolution, can be introduced. Right now, issues faced in multiple states are leading to litigations in multiple jurisdictions, even if it is the same assessee. GST report filing, reconciliations, and audit processes can also be simplified.
Ironing out documentation – Hotels need to obtain several licenses and approvals to start their operation. The finance minister has the opportunity to implement ease of doing business benefits by reducing the paperwork, making it cheaper and faster to set up hospitality operations. A single window system with time-bound approvals can be introduced in this regard.
Do not forget to tune into the budget speech on 1 February 2024 to get all the budget highlights in the tourism industry.
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