FAITH is looking forward to a path breaking budget for tourism industry
FAITH the policy federation of all the national associations representing the complete tourism, travel, and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) & cause partner AIRDA is looking forward to the Union budget FY 21-22 with great expectations.
FAITH Associations have been vigorously interacting with tourism, finance & NITI Aayog at various levels to hope that the budget not only pulls tourism in India out of the recessionary conditions but also enables Indian Tourism industry to claim its rightful leadership place.
To ensure that there is a shared tourism vision across the centre & state, FAITH has proposed the creation of a National Tourism Council of Chief Ministers headed by the PM along with the Tourism Minister. That should be supported by a common industry status across the country for the complete tourism industry by putting it in the concurrent list.
To ensure that the export potential certain measures must be taken. The tourism industry is fully recognised at par with merchandise exports, FAITH has recommended export earnings be made tax free and also incidence of taxes in tourism earnings be zero rated. Additionally, SEIS of 10% to all foreign exchange earning members in tourism be made applicable for 5 years to ensure a post-Covid recovery. A Global Mice Bidding Fund is required to be setup with ₹ 500 crs to double India’s mice share. Indian missions abroad in each country should be activated with tourism resources for maximum reach. This needs to be supported with Corpus of least ₹ 2500 crores is required for global branding budget to enable Sub Branding of three Tourism segments i.e. Indian MICE, Indian adventure, Indian Heritage under the Incredible India main brand.
To ensure that the tourism industry becomes a mainstay domestic industry there needs to be a concerted strategy. There needs to be made an income tax exemption on travelling within India income tax credits for upto ₹ 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers, and transporters anywhere within the country. It is also needed to incentive Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) by offering a 200% weighted income tax expense benefit to Indian companies which are undertaking mice events in India. A Natural & Cultural Heritage Restoration Fund must be set up with a corpus of at least ₹ 2000 crores which encourages sustainable and responsible development around each vertical of adventure tourism & cultural tourism. This will also be enabled by a truly seamless tourist transportation experience standardizing all tourism transportation taxes making them payable at a single point which will facilitate the ease of doing business.
Tourism can drive GDP through capex spending and to increase the intensity of high-quality hotel accommodation in India and mice, all hotels & mice venues across the country need to be tagged as vital social infrastructure. This needs to be complemented by a national tourism land SPV on a tripartite model which enables state governments & PSUs to pool their land assets which can enable PPP based on lease structures and not sale. This will drive immense capital into India.
Finally, it is critical to protect the business of Indian travel agents & tour operators and a structured mechanism is required to future secure travel agents’ payments to ensure that security for travel agents & operators’ survival. This is key as Travel agents’ payments to principals is unsecured credit and some form of mechanisms whether escrow or guarantee or underwriting based mechanisms are needed to be in place to ensure that travel agents money stays secure. The recently formed ECLGS under MOF which is administering the emergency credit guarantee fund must be used to set up a travel agent underwriting fund. Additionally, TCS must be abolished as it is an additional compliance hazard, and it is important to bring overseas global OTAs operating in India into the tax net of GST and other taxes. There needs to be a 100% tax exemption and permission to write back income / TDS/ GST etc to travel agents and tour operators on their transactions when airlines windup or closedown.
FAITH also hopes that GST policy issues in tourism will also be addressed bringing down the 18% GST category for hotels to the category of 12% GST, by providing an option of GST at 12% to restaurants with full set offs, by subsuming taxes on fuel, Inter- state transportation taxes, power cess, liquor excise and also property taxes, cess on parking charges as they are all forms of very high cost input indirect costs on tourism, travel & hospitality and need to be made available as input costs. The GST on Tour operators should be 1.8% with full set offs and additionally hotels need to be able to levy IGST to enable them to give GST credits to Indian corporates who do Interstate events and do not take these events international. This will streamline the complete GST chain and boost interstate corporate mice demand for hospitality.