Budget 2023: Hospitality & Travel industry’s expectations
by EVENTFAQS Bureau Industry Watch | January 24, 2023 | Feature
Budget 2023 Hospitality industry Travel Industry Nirmala Sithraman Jaison Chacko
As Nirmala Sithraman, Finance Minister is all set to present the Union Budget 2023-24 on February 1, travel and hospitality sectors expect a lot of offerings for the industry. Their demands include Minimum Alternate Tax, Infrastructure Status, Extend Investment-linked Benefits under Section 35 AD, among others.
EVENTFAQS Media collates the Hospitality and Travel industry’s expectations from the experts for the budget 2023-24.
Jaison Chacko, Secretary General, Federation of Hotel & Restaurant Associations of India
“The industry needs Infrastructure Status to be accorded by the Government of India to enable the hospitality sector to avail long-term funds under the RBI Infrastructure lending norm criteria. This will enhance quality accommodation supply and therefore, stimulate higher global and domestic travel demand. Although industry status has been accorded to tourism and hospitality by many State Governments, the incentives and privileges associated with an industry have not been conferred to the sector. Industry status will help in setting up a corpus fund to incentivise all states to align policies and set off any losses that may occur. Tourism and hospitality should be placed on the concurrent list of the constitution to make tourism into a national agenda. It will ensure better coordination between the centre and the state for fund allocation and implementation of projects and programs aimed for the holistic development of the tourism sector in the country.”
Vishal Suri, Managing Director, SOTC Travel
“The travel & tourism industry supports one in 10 jobs and provides livelihoods for a significant number of people in both developing and developed economies. As the sector recovers from the effects of the pandemic, we seek the government’s support for economic relief in the upcoming Union Budget with lower taxes and incentives to help boost the road to recovery. The industry appreciates the government’s support to enable revival and strengthen the sector for which we anticipate rationalization of tax structure via reduced GST, TDS rates, and TCS on LRS remittances, also clarification on the applicability of collection by e-commerce operators under section 194O, this will help reduce complexities and enable the industry to focus and accelerate businesses further. Further, corporates should be offered with incentives for organizing meetings and conferences in India through partial or full tax exemptions on the expenses incurred, this will help boost domestic travel and tourism. We seek assistance from the government in enhancing the structural transformation that is needed to build a stronger, more sustainable and resilient tourism industry. We need to focus on the tourism sector as a sustainable engine for economic growth and development.”
Pradeep Shetty, President, Hotel and Restaurant Association of Western India
“We expect the Union Budget to include relaxations in Section 115JB – Minimum Alternate Tax (MAT) waiver for two years from April 2023 to March 2025. This will help reduce the tax burden and provide marginal relief to the hospitality sector. The Budget should extend investment-linked benefits under Section 35 AD for brownfield hospitality projects to the on-going capex of hotels and resorts. This shall immensely benefit high-quality brownfield capex and capacity expansion, accelerating investment and employment in the sector. The Budget should modify the Leave Travel Allowance (LTA) rules to include the amount spent on hotel stays to be considered as LTA expense and payments by foreigners in Rupees at hotels should be as foreign exchange earned for the purpose of EPCG scheme. The ECLGS loan term should be increased for at least 10 years or as per the loan repayment period of the principal loan, whichever is longer. The industry needs a waiver of secondary condition with regard to average Foreign Exchange Earnings under EPCG scheme retrospectively from FY 2007-08 onwards as well as would require the continuation of EPCG Scheme, service export benefits and export status. Our long-standing demands has been for Infrastructure Status to the hospitality industry under the RBI Infrastructure lending norm and granting Industry status and allied benefits to the hospitality industry. Tourism and Hospitality should be placed on the concurrent list of the constitution for effective legislation to make tourism into a national agenda. Lastly, the industry requires uniform GST at 12 per cent on all hotels across the country.”
Mahesh Iyer, Executive Director & Chief Executive Officer, Thomas Cook India
“The Travel & Tourism sector is a significant contributor to India’s GDP and the planned National Tourism Policy intends to target GDP contribution of $1 trillion by 2047; $150 billion in 2024. In addition to Foreign Exchange earnings, our sector provides valuable skill development and employment generation across travel, tourism and allied industries. Support from the government would be invaluable in expediting revival post pandemic and harnessing the benefits of this powerful sector via rationalization of tax and budgetary outlay on infrastructure. Our key expectations for the upcoming Union Budget would include: lowering of TCS for outbound travel and LRS remittances; LTA expansion to once a year against twice in 4 years to boost domestic tourism; reduction of TDS rate as this could adversely impact corporate travel spends; exemption of travel agents from section 53 of GST as it forms a major compliance and working capital challenge for travel agents. Clarification on applicability of Section 194O on E-commerce would be of value - as the current definition covers facilities for ease of booking, even if the transaction is done offline. Additionally, enhanced coordination between banks and CIBIL for timely and accurate information to enable quicker ECLGS loan disbursements. From an inbound perspective: an alternate mechanism for SEIS to be developed for revival of the Inbound Tourism sector; granting of exporter status to Inbound Tourism; waiver of E-visa fees for 2023-24 aimed at promoting inbound tourism and thereby increasing GDP. Also, deeper marketing investments as part of the year long G-20 summit initiatives to promote tourism – both inbound and domestic. Further, a collaborative approach that co-opts us wherever there are new amendments and technical/interpretation matters.”
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With the Union Budget 2023-24 set to be presented by Finance Minister, Nirmala Sithraman on February 1, travel and hospitality sectors expect a lot of offerings for the industry.