FAITH expects a revolutionary budget for tourism industry
FAITH Associations have been interacting with tourism, finance & NITI Aayog to pull India's tourism out of recessionary conditions with Indian Tourism industry to get its deserved industry status.
FAITH Associations have recently shared their budget expectations that can bolster the tourism industry.
To ensure a shared tourism vision across the centre & state, FAITH has proposed creating a National Tourism Council of Chief Ministers headed by the PM and the tourism minister. Furthermore, FAITH has requested a common industry status for the entire tourism industry by putting it in the concurrent list.
FAITH has recommended export earnings to be made tax free, and the incidence of taxes in tourism earnings be zero-rated. Additionally, FAITH wants a SEIS of 10 per cent to all foreign exchange earning members in tourism be made applicable for five years to ensure a post-Covid recovery.
Moreover, the association believes that a 'Global MICE Bidding Fund' must be set up 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 a corpus of at least ₹ 2500 crores is required for the 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 build the tourism industry as a mainstay domestic industry, strategies have been suggested by the association. There needs to be made an income tax exemption on travelling within India, income tax credits for up to ₹ 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers, and transporters anywhere within the country.
FAITH also recommends incentivizing the Indian corporates to undertake domestic MICE by offering a 200 per cent weighted income tax expense benefit to Indians dealing with 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 standardize all tourism transportation taxes, making them payable at a single point, and facilitating ease of doing business.
Tourism can drive GDP through CAPEX spending and to increase the intensity of high-quality hotel accommodation in India. For that, all hotels and MICE venues across the country require to be designated as vital social infrastructure. This needs to be complemented by a national tourism land SPV on a tripartite model, which enables state governments and PSUs to pool their land assets, which can enable PPP based on lease structures and not sale. This will drive immense capital into India.
To protect the business of Indian travel agents & tour operators, a structured mechanism is required. This is key as Travel agents' payments to principals are 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 association has requested the urgent setting up of the travel agent underwriting fund by using the emergency credit guarantee fund granted by the ECLGS under Ministry of Finance. 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 per cent tax exemption and permission to write back income / TDS/ GST etc to travel agents and tour operators on their transactions when airlines windup or close down.
FAITH also hopes that GST policy issues in tourism will also be addressed, bringing down the 18 per cent GST category for hotels to the category of 12 per cent GST. The association hopes that this will be achieved by providing GST option at 12 per cent to restaurants with full set offs, subsuming taxes on fuel, Interstate transportation taxes, power cess, liquor excise, and property taxes cess on parking charges. They are all forms of very high-cost input indirect costs on tourism, travel & hospitality and need to be made available as input costs.
According to the association, the GST on Tour operators should be 1.8 per cent with full set-offs. Also, hotels need to levy IGST to give GST credits to Indian corporates who do Interstate events and do not take these events internationally. This will streamline the complete GST chain and boost interstate corporate mice demand for hospitality.
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