Strong de­mand for GST re­form

Ahead of the up­com­ing Union Bud­get 2018-19, the trade de­mands a higher bud­get al­lo­ca­tion for in­fra­struc­ture and hopes for GST re­forms to ease day-to-day busi­ness of tour op­er­a­tors and ho­tels.

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We ex­pect a higher bud­get al­lo­ca­tion for the tourism sec­tor to un­der­take ex­ten­sive pro­mo­tional ac­tiv­i­ties, de­velop and pro­mote new des­ti­na­tions. Re­lief in GST for tourism is awaited as per the rec­om­men­da­tions of FAITH. Pre­vi­ously, the gov­ern­ment had promised to recog­nise five tourism zones which are yet to be launched. The gov­ern­ment needs to en­cour­age pri­vate in­vest­ment by giv­ing at­trac­tive sub­si­dies to in­vestors for in­fra­struc­ture de­vel­op­ment and em­ploy­ment gen­er­a­tion. Un­der 'Dekho Apna Desh' cam­paign, the gov­ern­ment should fo­cus on do­mes­tic sec­tor by al­low­ing tax free tours.

I wish the cor­po­rate tax struc­ture is fur­ther ra­tio­nalised for the MSME, since the GST sys­tem is well in place. The gov­ern­ment should look at giv­ing us ‘ In­dus­try’ sta­tus and of­fer in­cen­tives to com­pa­nies which are reg­u­lar tax pay­ers and in the high­est tax slab. There is in­con­sis­tency in reg­u­la­tions be­tween and the Cen­tre and State for tourism. We need a sim­pler Cen­tredriven initiative to bring all states on a com­mon plat­form to fur­ther the gov­ern­ment’s ob­jec­tive of ease of do­ing busi­ness. The over­all tax­a­tion on tourism and hos­pi­tal­ity sec­tors need to be re­struc­tured and low­ered so as to stim­u­late growth and make In­dia com­pet­i­tive.

TAAI sits on the board of FAITH (Fed­er­a­tion of As­so­ci­a­tions in In­dian Tourism & Hos­pi­tal­ity). We were in­vited to at­tend the pre-bud­get meet­ing on De­cem­ber 6 with the Fi­nance Min­is­ter, where we raised sev­eral points such as ex­port sta­tus for tourism, IGST un­lock­ing for ho­tels, B2B credit for tour op­er­a­tors, etc. For IGST and ex­port sta­tus, they have rec­om­mended ap­proach­ing the law team of GST. Credit for tour op­er­a­tors and 18 per cent on rides is done in the GST coun­cil meet­ing. TAAI has also re­quested to make avi­a­tion a more trans­par­ent in­dus­try and recog­nise agents as prin­ci­pals. We will def­i­nitely be recog­nised as an in­dus­try.

We want that for tourism, the cas­cad­ing ef­fect of GST should be con­trolled. The five per cent tax levied on the en­tire pack­age along with in­di­vid­ual ser­vices in the pack­age, which are taxed separately, should be done away with. This is mak­ing the pack­age costlier for the cus­tomer. Se­condly, tourism should have same ex­emp­tions as ex­port busi­ness. On ex­ports and ser­vices in tourism, the GST ex­emp­tion should be the same, be­cause GST is sup­posed to be one tax, which is not the case. When for­eign­ers are tak­ing ser­vices against for­eign ex­change GST is levied but for goods sold abroad there should be no GST.

GST is hailed as the big­gest tax re­form of In­dia. The im­ple­men­ta­tion fo this tax struc­ture caused dis­rup­tion ini­tially, but it is grad­u­ally set­tling down. I feel that still there is enough space to re­duce the cor­po­rate tax to en­cour­age and en­thuse the cor­po­rate sec­tor to work hard and earn due re­turns. If the cor­po­rate land­scape is cul­ti­vated and sup­ported with re­duced cor­po­rate tax­a­tion, more busi­ness would come up in­creas­ing the rev­enue to the gov­ern­ment. It is time to make the GST regime more rea­son­able, for which the GST coun­cil has to be mo­bilised.

We are quite op­ti­mistic that this year’s Union Bud­get will fo­cus on tourism sec­tor as the gov­ern­ment is keen to gen­er­ate em­ploy­ment and in­crease rev­enue. We are grate­ful to the GST Coun­cil for al­low­ing in­put credit to tour op­er­a­tors who are buy­ing prod­ucts from other tour op­er­a­tors on the low­est slab of 5 per cent. How­ever, if the gov­ern­ment re­ally wants to help the tourism in­dus­try then they must exempt ser­vices pro­vided to for­eign tourist based on the for­eign ex­change earn­ings be­cause what­ever tax the gov­ern­ment charges to for­eign tourists it amounts to ex­port­ing of taxes.

In­dia is plan­ning to cut taxes on travel and tourism in the Bud­get to boost do­mes­tic tourism. In an age of strong com­pe­ti­tion from global des­ti­na­tions, tax rates should be on par with global stan­dards to in­ject vi­a­bil­ity into the sec­tor. The uni­for­mity of taxes across states is also vi­tal in this con­text. The bud­get is also ex­pected to sig­nif­i­cantly raise al­lo­ca­tions for tourism in­fra­struc­ture and raise in­come tax ex­emp­tions on in­vest­ments in new ho­tels. This shall in­cor­po­rate lower in­come tax on cor­po­rate profit, of­fer tax in­cen­tives on ho­tel con­struc­tion and al­lo­cate more funds for new tourist trains and build­ing roads to tourist des­ti­na­tions.

To en­cour­age do­mes­tic MICE, five per cent cor­po­rate tax re­duc­tion should be an­nounced for com­pa­nies con­duct­ing their an­nual meets, staff meets, etc. in In­dia. In­cen­tives/ in­come tax re­duc­tion needs to be given for cor­po­rate com­pa­nies con­duct­ing meet­ings in In­dia. We ex­pect low­er­ing of 28 per cent GST to 18 per cent on ho­tels charg­ing tar­iff of ` 7500. There is a need to en­hance the In­cred­i­ble In­dia web­site to fea­ture among the world’s top 10 pop­u­lar web­sites. The Gov­ern­ment needs to en­cour­age tour op­er­a­tors to re­main in busi­ness by giv­ing low­est tax slabs and in­cen­tives. The present mul­ti­ple GST sys­tem in B2B and B2C seg­ment needs to be re­moved.

The In­dian travel pack­ages have be­come ex­pen­sive with GST and are un­able to com­pete with the prices of hol­i­day pack­ages of­fered by other coun­tries. Cur­rently, we have to pay around 30 per cent tax for an In­dian pack­age whereas only 10 per cent tax is payable for Sin­ga­pore and Thai­land. This dif­fer­ence in GST tax struc­ture is ham­per­ing steady busi­ness flow. A large chunk of hote­liers and ser­vice providers are still not un­der the purview of the new tax scheme. Be­sides, we need more rooms in var­i­ous des­ti­na­tions to gen­er­ate more busi­ness even on the do­mes­tic tourism front.

Tourism has mostly sur­vived on the dy­namism of en­trepreneur­s who have strived to make the in­dus­try the se­cond largest in the coun­try to­day. How­ever, the gov­ern­ment does have a big role to play in pro­mot­ing the in­dus­try and giv­ing it that ex­tra push to help make it the largest in the coun­try. As the gov­ern­ment gets ready to place the Union Bud­get, we, the stake­hold­ers in the tourism in­dus­try look for­ward to a pos­i­tive bud­get mostly in terms of cut­ting down of taxes, mak­ing GST min­i­mal, in­creas­ing in­vest­ments for pro­mo­tion and build­ing in­fra­struc­ture. With taxes get­ting min­imised the in­dus­try will re­ceive a big boost to strive for­ward in gen­er­at­ing more em­ploy­ment.

Some of the ex­pec­ta­tions from the up­com­ing Bud­get in­vlove in­bound tourism sec­tor gen­er­at­ing for­eign ex­change re­serves should be treated on par with ex­port of ser­vices and hence, should be ex­empted from GST. There is a need for stricter laws and bud­get al­lo­ca­tion for pro­tec­tion of arche­o­log­i­cal sites and mon­u­ment; higher bud­get al­lo­ca­tion for Swachh Bharat and bet­ter im­ple­men­ta­tion; sup­port for bet­ter and ad­e­quate tourism in­fra­struc­ture; more bud­getary al­lo­ca­tion for pro­vi­sion of tourist po­lice and its ef­fec­tive im­ple­men­ta­tion; stricter laws re­quired for un­reg­u­lated tourism ac­tiv­i­ties at sev­eral tourist spots.

The cur­rent tax sys­tem is go­ing through a ma­jor change by im­ple­men­ta­tion of GST and merg­ing all taxes. How­ever, the im­ple­men­ta­tion and efil­ing is not in proper or­der. It should be more flex­i­ble and tax-payee friendly. It would be bet­ter to sim­plify the pro­ce­dure to get rev­enue for the coun­try. My ex­pec­ta­tion from the Fi­nance Min­istry this year is that he con­sid­ers re­lax­ing road tax, give more in­cen­tives to tourists, and sim­plify get­ting per­mits. They should lay more em­pha­sis on bet­ter ac­com­mo­da­tion at touris­tic places, con­nec­tiv­ity, hy­giene, se­cu­rity, etc. for more in­flow of tourists.

We are look­ing for­ward to re­forms sup­port­ing the in­dus­try. While the gov­ern­ment is ag­gres­sively mar­ket­ing brand In­dia glob­ally, it is im­per­a­tive to fo­cus in­ter­nally and ad­dress is­sues around tax­a­tion, in­fra­struc­ture and in­con­sis­tent reg­u­la­tions im­posed by var­i­ous states to achieve the po­ten­tial of these in­dus­tries. We also hope the Union Bud­get will em­power each of the in­dus­tries to take full ad­van­tage of var­ied op­por­tu­ni­ties ahead. The in­dus­try’s de­pen­dence upon tech­nol­ogy is grow­ing to im­prove ef­fi­ciency, ac­cel­er­ate prof­itabil­ity. We ex­pect Global Dis­tri­bu­tion Sys­tems to be­come more deeply em­bed­ded across these sec­tors.

It will be ex­cit­ing to watch the first Union Bud­get post the GST roll­out. Much has been in news about the gov­ern­ment’s spe­cial pro­vi­sions to­wards the fast-grow­ing tourism sec­tor in this bud­get. It can fur­ther boost in­vest­ment and em­ploy­ment op­por­tu­ni­ties, thus cre­at­ing more av­enues for SME start-ups like ours. I would be happy to see these spe­cific mea­sures apart from gen­eral dec­la­ra­tions such as fur­ther sim­pli­fi­ca­tion and ra­tio­nal­i­sa­tion of GST slabs and rates, in­cen­tives on dig­i­tal pay­ments, and low­er­ing of tax slabs in ho­tels and other tourism-re­lated ser­vices within In­dia to boost do­mes­tic tourism.

I ex­pect the gov­ern­ment this year to make sub­stan­tial bud­get al­lo­ca­tion to up­date cur­rent tourism as­sets as well as cre­ate new ones. It must con­sider cut­ting taxes on travel and tourism prod­ucts, thereby giv­ing im­pe­tus to do­mes­tic tourism growth. Hope­ful, the gov­ern­ment will relook at per­sonal in­come tax slabs as well, so that peo­ple have more money to spend and they travel more.

My ex­pec­ta­tions from this year’s Bud­get are very high. How­ever, the top-most re­lief ex­pected for travel and tourism is re­duc­tion of GST so as to com­pete in global mar­kets. Due to dig­i­tal­i­sa­tion and on­line pay­ments, an­other ma­jor ex­pec­ta­tion from the Fi­nance Min­istry is to seek from the banks a re­duc­tion in credit card charges for client pay­ments re­ceived to be­low one per cent. For­eign ex­change earn­ings of all type by travel agents should be treated as ex­ports and GST and in­come tax should be mar­ginal so that it en­cour­ages in­flow of busi­ness into In­dia.

As per the WTTC Tax Barom­e­ter, In­dia has the high­est tax in the re­gion with 15-20 per cent. The Fi­nance Min­istry needs to make In­dia a com­pet­i­tive desti­na­tion by re­duc­ing taxes and elim­i­nat­ing com­plex­ity of GST for this in­dus­try. The gov­ern­ment also needs to equate ex­port ben­e­fits on goods with ex­port ben­e­fits on tourism ser­vices. Al­lo­cate more funds for mar­ket­ing, pro­mo­tions, im­part­ing skills and cre­ate a level play­ing field for the trade. Can we also ex­pect an over­all out­lay of about ` 5000 crore for this in­dus­try ver­sus the cur­rent ` 1750 crore?

Union Bud­get 2018 is ex­pected to fur­ther har­ness the po­ten­tial of the ` 13 tril­lion worth travel and tourism sec­tor that has phe­nom­e­nally boosted the eco­nomic con­di­tions of the coun­try. The gov­ern­ment is likely to give more in­cen­tives to pro­pel this drive and make the sec­tor grow even more. We are still scratch­ing the sur­face of how this sec­tor can grow with more tourism pro poli­cies in­clud­ing strate­gic con­tin­u­a­tion of GST plan, in­fras­truc­tural de­vel­op­ment through restora­tion of no-frill air­ports in Tier-II and III cities, fur­ther re­duc­tion of cor­po­rate tax rates and help do­mes­tic as well as for­eign tourist ar­rival to grow ex­po­nen­tially. The Fi­nance Min­istry is also in talks of low­er­ing the 28 per cent GST on ho­tel tar­iffs. All this com­bined cre­ates a con­text of high growth po­ten­tial for the in­dus­try through tech­nol­ogy that is the back­bone which con­nects and caters to most cus­tomers.

There is a slight dis­ap­point­ment that the gov­ern­ment did not an­nounce any ma­jor in­cen­tive for the sec­tor. Hav­ing said that, the in­fra­struc­ture im­prove­ment of 3,500 rail­ways lines across In­dia and set­ting up of air­ports in Tier-II cities and ded­i­cated trains for re­li­gious tourism will make peo­ple travel more. Knock­ing off the ser­vice charge on rail tick­ets is also a wel­come move. How­ever, be­tween prom­ise and de­liv­ery there is al­ways a gap, so it re­mains to be seen how the im­ple­men­ta­tion is done ef­fec­tively and in time. Tourism zones have also been an­nounced but the clar­ity on these have not been rolled out yet.

The Fi­nance Min­istry needs to re­duce di­rect and in­di­rect taxes and make In­dian ho­tels com­pet­i­tive in terms of price and qual­ity among Asian coun­tries. The min­istry needs to en­cour­age rail passes within In­dia with re­gional and na­tional travel passes like Europe does. It also needs to be tax-free for in­bound trav­ellers. The gov­ern­ment must de­clare in­cen­tives to de­velop at­trac­tions in all states, and pro­vide in­cen­tives on in­vest­ments for build­ing bud­get ho­tels. The Bud­get should also ad­dress re­fund of tax on shop­ping by in­bound tourists as pro­vided by Euro­pean coun­tries as VAT re­fund. In­tro­duce tax free pur­chase shops in cities for for­eign tourists. In­cen­tive should be pro­vided to travel agents for pro­mot­ing In­dia.

The Bud­get has al­ways been a non-event for the travel in­dus­try, de­spite tourism be­ing one of the ma­jor em­ploy­ment gen­er­a­tors in the coun­try. Un­for­tu­nately, the travel fra­ter­nity does not have a united voice and there­fore, our wish list is nei­ther heard nor acted upon by the cen­tral gov­ern­ment. Even six months af­ter the im­ple­men­ta­tion of GST, the travel bag has mul­ti­ple cat­e­gories and a lot of con­fu­sion still pre­vails over its im­ple­men­ta­tion. I wish the bud­get can at least ad­dress and clar­ify some of the con­fu­sion and chal­lenges faced by the tourism sec­tor. The in­bound in­dus­try will ben­e­fit from ra­tio­nal­i­sa­tion in tax struc­ture in ho­tel and restau­rant busi­ness.

The signs of the in­dus­try bounc­ing back is very ap­par­ent and we are ea­ger to see how the Bud­get will fur­ther aug­ment growth. The in­dus­try has been keenly look­ing for­ward to the gov­ern­ment’s fo­cus on in­cen­tives for the com­mer­cial real es­tate sec­tor such as RE­ITS, real es­tate reg­u­la­tory bill and sin­gle-win­dow clear­ances. We are hop­ing there are pro­vi­sions and in­cen­tives to pro­mote MICE based tourism, as well as Tier II and Tier III mar­kets which are be­com­ing at­trac­tive spots for not just cul­tural and re­gional tourism, but busi­ness tourism as well. We also hope that ad-hoc rul­ings such as the high­way liquor ban of last year are cur­tailed as these are ex­tremely detri­men­tal to our busi­ness.

Tushar Kanti Ghosh Ex­ec­u­tive Pres­i­dent East­ern Hi­malaya Travel and Tour Op­er­a­tors’ As­so­ci­a­tion

Bharat Bhushan Atree In­dia Travel Award win­ner and Man­ag­ing Di­rec­tor, Ca­per Travel Com­pany

Haresh Koyande In­dia Travel Award win­ner Founder and MD World Travel Stu­dio

Iqbal Mulla In­dia Travel Award win­ner and Chair­man, Trea­sure In­dia

Shashank S Mishra In­dia Travel Award win­ner CEO, Sports Kon­nect

Dr. Ankur Bha­tia Ex­ec­u­tive Di­rec­tor, Bird Group

EM Na­jeeb In­dia Travel Award win­ner Chair­man–South­ern Re­gion, IATO

Anil Pun­jabi Chair­man, Travel Agents Fed­er­a­tion of In­dia (East In­dia)

Ni­lan­jan Basu Joint Sec­re­tary Travel Agents As­so­ci­a­tion of Ben­gal

Sub­hash Goyal In­dia Travel Award win­ner and Hony. Sec­re­tary, FAITH

Anish Ku­mar PK Pres­i­dent ATTOI

Pronab Sarkar Pres­i­dent IATO

Jy­oti Mayal Hon. Sec­re­tary TAAI

PP Khanna Pres­i­dent ADTOI

Ma­hen­dra Vakharia In­dia Travel Award win­ner and Pres­i­dent, OTOAI

Ma­hesh Shi­rod­kar In­dia Travel Award win­ner and Man­ag­ing Di­rec­tor, Tamarind Global

Ash­wini Kakkar In­dia Travel Award win­ner Ex­ec­u­tive Vice Chair­man Mer­cury Trav­els

Manoj Saraf In­dia Travel Award win­ner and Man­ag­ing Di­rec­tor, Gain­well Travel & Leisure

Sh­we­tank Singh VP – De­vel­op­ment and As­set Man­age­ment In­terGlobe Ho­tels

Om Prakash Se­h­gal In­dia Travel Award win­ner and Di­rec­tor, InORBIT Tours

San­deep Dwivedi COO, ITQ In­dia Travel Award win­ner

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