Union Budget 2019: Reduction of tax burden for tourism industry

By Sikha Thakur

The Union Budget 2019 announced by Nirmala Sitharaman has promised to develop 17 iconic world-class spots for tourism. The compensation for tourism and culture ministries increased simply by 1.82 percent and 7per cent. Allocation for building tourism and infrastructure stands at Rs 1378.53 crore in the current budget and Rs 575.50 crores was allocated for promotion and publicity.  Even if the announcement was appreciated by stakeholders, yet the real picture was hardly spoken out. Revision in GST rates, boosting in travel related foreign exchange earnings and other travel related factors was hardly considered.

Gurbaxish Singh Kohli, Vice President of FHRAI (Federation of Hotel & Restaurant Associations of India) & President, HRAWI (Hotel & Restaurant Association of Western India) said, “The expectations of the industry were an all-time high with the current Union Budget has let them all down. He further added that though the Hon. PM wants to boost the tourism and hospitality sector but the intent on the same speaks otherwise. As far as policies by the government in black and white are concerned there is nothing much that has to be done. The budget only mentioned 17 tourist-friendly spots, but has no mention of where the spots are or the modalities of these spots. Hence it is too early to comment.”

Industry experts were expecting reforms in GST, Input Tax Credit and steps to encourage the flow of incoming traffic. This sector is one of the biggest contributors to GDP, Taxes and employment generation, hence cannot be ignored. As per reports, the contribution of this industry to India’s GDP is expected to be INR 32.05 trillion (USD 492.21 billion) in 2028 from the current INR 15.24 trillion (USD 234.03 billion) in 2017. The right kind of policy and support from the government is of utmost importance to enhance the industry, help bring in both domestic and foreign tourists.

“The government should focus on providing better infrastructure in terms of connectivity improvement. Over the last few years the increased digital penetration has led to improved opportunities of business in the Indian tourism market. To sustain the same, the government should particularly focus on the Regional Connectivity Scheme (UDAN). There are expectations around favourable policies, fund allotment and better tax reforms,”said Indroneel Dutt, CFO, Cleartrip.

Aditi Balbir, founder and CEO, V Resorts, stressed that the government should focus on promoting the sector by establishing better processes to deal with waste management, pollution control, water management and traffic management. ‘There is a need to provide advanced infrastructure to promote tourism in India and to bring the services at par with the other tourist destinations from worldwide,” she further informed.

“Schemes like CGTMSE and Mudra Loans look great on papers but yet not transparent. Banks and financial institutions are unaware of it and keep asking for collateral for such loans. He urged the government to look into these aspects so that things get more simplified and can reduce the stress on entrepreneurs and boost the entrepreneurial ecosystem,” highlighted Anil Kumar Prasanna, CEO AxisRooms.

Cygnett Hotels and Resorts founder and managing director had a little different take and expressed his view in a rather unique way. He asked the government to empower the middle class and lower income group. The reason behind – as the marginalized become stronger it will open new avenues and wider customer base for the industry and the hospitality industry is set to see positive domestic tourist growth.

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