Union Budget 2022: Hospitality industry seeks reliefs, relaxations

Expects a fresh and robust start to the year, aided by a favourable Union Budget 2022

The year 2021 was yet another turbulent one for the travel and hospitality industry. The delta variant of Covid19 devastated operations and left many out of business. To prevent this from happening again, the upcoming Union Budget is expected to lay a roadmap for the recovery for the industry and provide necessary reliefs and relaxations. Having stepped into the year 2022, travel and hospitality stakeholders hope for a fresh and robust start to 2022, aided by a strong budget plan by the Central Government.  

Hospitality Association of India, the apex organisation of the hospitality industry in India has issued an official statement emphasising on the fact that the sector’s recovery will be secured by stronger investments and lower taxation. The statement said, “It is critical to protect the industry during such prolonged periods of flip-flop in business prospects. Access to softer funding, longer periods to repay loans, resultant shortening of the gestation period will make hotel investments more attractive and sustainable. More hotels would mean more jobs, more development. Infrastructure Status will also enable hotels to avail benefits of lower taxation, utility tariffs and a simplified approval process for projects. Additionally, the road to recovery can also be aided through measures like an extended moratorium, rationalization of taxes and facilitating ease of doing business.”   

Col Manbeer Choudhary, Chairman-cum-Managing Director, Jewels Group of Hotels, said, “The industry is keenly looking towards the upcoming Union Budget for some relief and support for recovery. It’s not just large-scale reforms and special packages that the industry is seeking but there is also a dire need to consider timely restrictions imposed every time when the pandemic changes its face. Revisiting the GST structure to reduce complexity would be a welcome move. Varied GST for different products and services creates confusion. Reduced GST on the services which currently come under high levels would make services more affordable and help in getting better business volumes. Also, easier loan facilities for MSMEs and subsidies would aid the recovering domestic businesses.”   

Pranav Dangi, Founder of Hosteller, expressed his concerns on the pressure of maintaining high operational standards amid the pandemic which led to service debts. “The prolonged effect of Covid19 on the overall hospitality sector has created a burden on small- to medium-scale players to service their debt obligations. Ongoing pressure on such players to maintain high operational standards, as required in the hospitality industry, has pushed them towards higher operational costs and thereby leading to the inability to service their debts. We feel, in 2022-23 budget, the Government of India will create provisions to create liquidity for the travel and tourism industry, provide directions to the central bank to roll out low-interest working capital loan schemes and expedite the paperwork process. This shall navigate the industry through the difficulties imposed due to the pandemic,” he said.     

According to Miten Shah, co-founder, The Studs Sports Bar & Grill, the industry needs maximum support from the Government to land on its feet again. “Multiple operating hour restrictions, capacity restrictions, lack of landlord support as well as Swiggy and Zomato deliveries also coming under the GST ambit have all made it worse for the industry. The relaxation could be offered in the form of GST Input Credit being reinstated on the Capex, rentals and many other spends on which restaurants pay about 18 per cent GST but does not get the setoff against the taxes collected from the customers. This 18 per cent tax thus directly hits the profits of the restaurants and significantly affects the bottom line. This is the least that the Government could do to give some relief to an already ailing Hospitality industry,” he suggests.   

Amit Damani, co-founder, Vista Rooms, brought into light the dreadful condition of the homestay segment, addressing the need of having clarity of rules and taxations surrounding homestays. “If we look at the homestay villa segment, it has always been in the grey area and we’d need more clarification at the national level on rules and tax systems that apply to the segment. Currently, it’s fairly fragmented, and each state may have its own set of laws surrounding what constitutes a homestay or BnB, and that's more of a recognition than a policy. We’re trying to simplify and get each and every property registered as a BNB nationally. Sufficient legislation and policy recognition are critical, and we expect to see suggestions in this year's budget,” he said.   

Madhavan Menon, Managing Director, Thomas Cook India Group, said, “Empowering our global embassies, export (zero-rated) status to the inbound tour business and deeper marketing investment is much needed to kick start inbound demand and ensure competitive viability when compared to our neighbours in the region. We look forward to the Government’s announcement of granting industry status, rationalisation of taxes (including a complete GST tax holiday, exemption of TCS levy on overseas holiday packages and reduction in indirect taxes), removal of SEIS benefit capping of five crore and introduction of soft loans with favourable terms as a stimulant to enable the sector get back on its feet. This will equally harness its force multiplier impact towards GDP contribution, employment generation/ skill development - much needed as the country heads towards recovery, revival and growth.   

Dinesh Kumar Kotha, co-founder and CEO, Confirmtkt, an integrated online booking platform for intercity travellers, said, “According IBEF statistics, the travel and tourism industry provides four crore jobs, 8 per cent total employment in the country and contributes nearly 7 per cent to the GDP. This industry was definitely one of the hardest-hit industries in the pandemic. So we can expect necessary support and relief from the Government that will help the sector recover some of the ground it lost during the pandemic."   

Vishal Suri, Managing Director, SOTC Travel, looks at the Government’s support for lowering taxes and incentives to help boost the road to recovery. “Rationalisation of tax structure will help reduce complexities and will enable the industry to focus and accelerate businesses further. Eliminating the five-crore capping for the SEIS benefit would provide much-needed impetus to post-Covid19 revival of the tourism industry and promote employment generation. More importantly, to boost domestic travel and tourism, incentives should be offered to corporates for organising meetings and conferences 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 maintains.   

Manish Rathi, Founder and CEO, IntrCity, commented on the need to enable smooth connectivity between cities in order to boost the intracity segment. “We are hopeful that in the forthcoming budget, stronger infrastructure initiatives will be incorporated into the National Infrastructure Pipeline. The mobility needs of smart cities will lead to the next wave of inter-city mobility growth and enable smooth connectivity with the nearest metro city, besides connectivity between those cities. Better multiple boarding infrastructure in the city connected to SmartBus and digital booking will drive this growth and power the economic growth of these cities. Additional policy impetus should be provided for all forms of green fuel and their enablement for inter-city mobility: batteries with longer distance capability to power EVs, charging infrastructure, and highway CNG stations. Besides, they should also monitor the implementation of the All-India Tourist Permit for Commercial Vehicles, ensuring that it is accepted by all state RTOs,” he suggested.   

Assocham too presented some recommendations regarding different matters in the travel and tourism industry. It suggested creation of a unified tourism body for the inclusion of tourism in the concurrent list. Moving tourism to the concurrent list will ensure uniformity in policies and an umbrella organisation to promote tourism investments. It also suggested integrated digital platform for enabling seamless transactions for booking local transport, tickets for monuments and other transactions, permits to avoid use of multiple applications. For the issue of CRZ norms and clearances, it suggested relaxation in CRZ norms for beach properties and especially all clearances for MOEF and CRZ to be provided from the state and not from centre.   

Ronojoy Dutta, Whole Time Director and Chief Executive Officer, IndiGo, shed light on unreasonable taxation on civil aviation stating, “Civil aviation pays 21 per cent of its revenues to the Government in indirect taxes with little input credit. It is an unreasonable proposition to expect that the industry should earn a 21 per cent margin just to pay taxes to the Government. This unreasonable proposition is resulting in an industry that is chronically ill and is unable to live up to its true potential of boosting commerce and employment. We would request the Ministry of Finance to take some immediate action to address this long festering problem. Central excise taxes on fuel should be reduced from 11 per cent to 5 per cent, ATF should be brought under the GST and custom duties on repair parts should be eliminated.  

Dilip Modi, Founder, Travel Union, said, “Budget 2022 should focus on lending substantial support to the travel industry. Right now, it is important to revive the industry by taking initiatives that protect small and medium businesses operating in the sector while extending a helping hand to travel agents. Providing tax relief in the TDS & GST applicable to travel agents and SMEs will go a long way in doing just that. We need to build and focus on rural travel as well since it is one of the aspects of the travel sector that needs our focus and investment. Investment in technology can play a pivotal role in bringing the next wave of innovation, employment and development in the travel industry.”  

Sibasish Mishra, Founder CEO, BookingJini, a hospitality-focussed SaaS platform, said, “We interact with hundreds of hoteliers every day, and we’ve discovered that the industry’s main goal is to give hotel owners the status of ‘infrastructure,’ since this will solve a large number of the challenges that hotels and hospitality firms face. The step will help the industry’s operational survival and encourage investment in the sector. Access to funding, extended repayment periods for loans, and the resulting reduction in the gestation period will make hotel investments more enticing and sustainable. More hotels would lead to more jobs and growth.”  

Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts, shared, "It’s well known that the hospitality sector has been one of the most impacted industries because of Covid19. Before the Omicron hit us, we were steadily getting back on track. However, the sector has again been badly hit and there are several hospitality companies, especially small and medium enterprises, who are in distress. It would be good if the budget provides the industry with structured assistance so that the industry can get back to functioning at the optimum level and continue to contribute to India’s economic growth and rise."


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