India likely to reduce tax on tourism, extend incentives

Published on : Monday, January 8, 2018

According to a media report, India is planning to reduce taxes on travel and tourism in next month’s Union Budget and provide more incentives to the $210 billion sector hoping to boost economic growth and create more jobs. The move could add to a domestic tourism boom in the world’s second most populous nation, where low inflation and rising incomes are changing lifestyles and consumption patterns of an estimated 250 million middleclass Indians. With scores of destinations introduced on airline routes last year, air travel is also surging. India’s tourism sector grew over 10% in the six months ending September, compared to near 8% in the year ago period. According to an industry report, tourism employs 40 million people in India and could add 10 million jobs in a decade.

“We’ll announce measures in the budget to promote investment in the tourism sector,” a top finance ministry official told, adding that finance minister Arun Jaitley favours lowering a 28% tax on hotel tariffs, and offering incentives to attract private investments.
If the moves come about, companies expected to benefit include airlines like IndiGo, owned by InterGlobe Aviation, and Jet Airways and hotel operators such as Indian Hotels, that owns the Taj Mahal chain and EIH Ltd that operates the Oberoi hotels in India. Tour operators including Cox & Kings and Thomas Cook are also likely to gain.

In India tourists, on average, pay 30% tax on hotel rooms and travel compared with less than 10% in Singapore, Thailand and Indonesia, said Pronab Sarkar, President, Indian Association of Tour Operators (IATO).

 
Another official said Jaitley was expected to lower income tax on corporate profit, offer tax incentives on hotel construction, allocate more funds for new tourist trains and building roads to tourist destinations. The Centre will offer incentives to more regional airlines this year to cover new, underserved airports, the official added.

In India tourists, on average, pay 30% tax on hotel rooms and travel compared with less than 10% in Singapore, Thailand and Indonesia, said Sarkar.

Tags: India