The Confederation of Indian Industry (CII) estimates the revenue loss for the Tourism & Hospitality industry in the country to be around USD 28 billion during the period October 2019 to April 2020 season. Considering 75 percent of the industry is Small and Medium Enterprises, the CII expects more than half of the industry going sick leading to loss of jobs to nearly 2 cr people in the sector. With travel sentiments across the globe is expected to take a long time to revive in the wake of the Covid pandemic, the industry body does not expect the sector to see any cash flow normalization before November this year.
CII has demanded the government to intervene with stimulus measures for the industry. The industry confederation has demanded six to nine months’ moratorium on all working capital principle, interest payments on loans and overdrafts bringing in liquidity allowing for business continuity, without categorizing the companies as NPAs. It has also asked for deferment of GST & Advance Tax payments at the Central Government level and removal of fees for any upcoming licenses/permits renewal/ Excise exemption for liquor for the hospitality and travel industry across the states.
As a lot of conferences, events, etc. got cancelled for which the GST has been paid already, the industry body has asked for immediate refund. Heat-Light-Power (HLP) on average equates to 25 percent of the industrial costs. Therefore, a 50 percent reduction to our HLP costs is required for the sustenance of business.
Another major recommendation of CII is pertaining to EPCG and SEIS schemes. CII has asked the government to consider an extension in export obligation fulfilment period for EPCG to an additional 3 years from the existing 6 years. The notified services are incentivised under SEIS at an enhanced rate of 10 percent based on the companies last year submissions of net foreign exchange earnings. CII also demanded short term interest free or low interest loans and double overdraft facility for the industry to overcome the fund crisis arising out of the Covid-19 situation.
In order to avoid there is mass retrenchment in the industry, CII has demanded Financial support under Mahatma Gandhi National Rural Employment Guarantee Act
2005 (MGNREGA) or a similar Scheme should be extended to entire travel industry in order to prevent employment loss. The proposed TCS on travel in Finance Bill 2020 to be deferred and open a sectorial conversation on the merits and demerits of the law. The TCS ruling will shift all sales
of outbound tourism to overseas suppliers denying the government of all GST Revenue, CII stated.
Taking the serious crisis in the Aviation industry separately, the CII has asked for immediate relief by way of subsidy packages, tax/fee rationalisation to tide the current crisis. The industry confederation has reiterated the demand for bringing ATF into the GST ambit, to enable full input tax credit; rationalisation of VAT on ATF by states, relief on Air Navigation Service (ANS) and Land Parking and Housing charges, etc.
