Budget 2022: Tourism industry seeks incentives to reboot sector
Premium- The travel and tourism industry requested the government to consider extending the LTA exemption limit and bring it under the yearly allowances list for taxpayers
NEW DELHI: The travel and tourism industry, which has been badly hit by the pandemic, has pinned hopes on the upcoming budget to hasten recovery for the sector. Extending leave travel allowance (LTA) exemption limit for taxpayers is one of the demands of the industry, said travel firms like MakeMyTrip, ixigo and Thomas Cook.
“We request the government to consider extending the LTA exemption limit and bring it under the yearly allowances list for taxpayers. Currently one can apply for a leave travel exemption once in two years or twice in a four-year block,'' said Rajesh Magow, co-founder, MakeMyTrip. It would be better if employees could claim this once every year instead of every alternate year, he added.
Online travel portal ixigo's co-founder Aloke Bajpai said they expect the government to strategise a sustainable long-term plan to help revive in-bound international travel which is currently disrupted by ongoing waves.
He added that they also expect the upcoming budget to allot incentives for domestic tourism and promote it within the country. "IT deductions on domestic travel and tourism spends will help incentivise tourism and boost domestic travel further. Tax breaks and waivers for the airline sector will also help aid faster recovery of the industry. Bringing aviation turbine fuel under the ambit of GST (which currently comprises 40-45% of the total operating cost of an airline) will bring much-needed relief to the aviation sector," said Bajpai.
Last year, the budgetary allocation for the Ministry of Tourism was slashed from ₹2,500 crore in 2020-21 to ₹2026.77 crore in 2021-22 which came as a massive blow to the industry.
Indian Association of Tour Operators hopes this year there will be an added withdrawal of tax collection at source (TCS) for foreign tourists that will encourage in-bound tourism. Starting October 2020, Indian tour operators were required to collect 5% TCS on billing to foreign tour operators or individual foreign travellers to India in spite of the fact they do not hold a PAN card in India and are not liable to pay income taxes here. The foreign tour operators are not Indian residents and hence are not liable to pay income tax.
"We request the government to consider withdrawing Tax Collected at Source (TCS) of 5% on sale of overseas holiday package by Indian tour operators," said Magow of MakeMyTrip.
SOTC Travel, too, expects there be a consideration of further economic relief for the industry at-large with lower taxes and incentives to help boost the road to recovery.
Vishal Suri, managing director, SOTC Travel said rationalisation of tax structure will help reduce complexities and will enable the industry to focus and accelerate businesses further. To boost domestic travel and tourism, incentives should be offered to corporates for organising meetings and conference in India through partial or full tax exemptions to the corporates on the expenses incurred.
"The Government should reboot the tourism economy on a stronger, fairer and more sustainable footing," he said.
The travel and tourism sector has been a key contributor to the GDP and the budget could be an opportunity to create a stimulus towards revival. According to WTTC, India ranked tenth among 185 countries in terms of travel and tourism's total contribution to GDP in 2019. During that year, its contribution to the GDP was 6.8% of the total economy or about Rs. 13,68,100 crore.
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