Hospitality and travel sector players on Tuesday demanded infrastructure status for the hotel industry besides measures such as tax exemption on LTA annually to boost domestic tourism ahead of the Union Budget. They also recommended removal of the current TDS levied on automated bookings for internal or closed user groups such as business travel platforms and reducing the total number of licenses required to establish a hotel.
“A full-blown infrastructure status for the hotel sector and further rationalisation of the Goods and Services Tax (GST) and a Central single window clearance for hotel projects are some of the major expectations from the Budget 2024,” an industry expert said in a statement.
The industry has been clamouring for infrastructure status for decades. The status will enable hotel projects to have easy access to cheaper debt that is at par with projects in other industries. A reduced capital cost will have a bearing on both timely completion of projects and their overall financial health, he added.
Another expert said albeit interim, the Union Budget offers a significant opportunity as a growth accelerator for the travel and tourism sector, which is “a valuable contributor to the country’s GDP and a powerful employment engine”.
Calling for a multi-pronged approach, he asked the government to “remove the deterrent to technology in the form of the current TDS that is levied on automated bookings (self-booking tools) for internal/closed user groups such as our business travel platforms”.
“This would align with the government’s commitment to ease of doing business and digital adoption, and the larger objective of building a Digital India,” he added.
Another industry expert said in order to give a boost to travel and tourism spending, a reduction in income tax levels is needed to provide increased disposable income in the hands of the people.
Also, he recommended tax exemption on LTA annually, against twice in four years to catalyse domestic tourism, while also proposing standardisation of TCS at 5 per cent on foreign travel packages against the current 5 per cent and 20 per cent slabs.
Another expert also asked the government to consider lowering of GST rates on hotel room tariffs of Rs 7,500 and above to 12 per cent from the current 18 per cent saying it is “still high in this competitive scenario”.
He acknowledged that the GST Council in 2019 green-lighted a reduction in the GST rate on the hotel room tariffs of Rs 7,500 and above to 18 per cent from 28 per cent earlier.
