IATO requests the council to consider charging GST on tour operators on 10% of the service charged or 1.8% of gross billing of the tour operator as compared to the present 5%.
While no sector of the economy has escaped the impact of Covid 19, among the worst hit is the tourism sector, particularly the inbound one with more than one year of complete washout and no immediate revival insight. In a scenario like this, IATO has written to the Union Finance Minister urging it to use its wherewithal at the upcoming GST council meeting and ask the council to consider rationalization or lowering of GST on various tourism-related services as this will help boost the sector as and when the revival happens.
It will be pertinent to point out that GST on Tourism services in India is more than double as compared to the neighbouring countries and that places us at a huge disadvantage. In order to compete, GST rates on tour operators need to be rationalized.
Specifically, IATO requests the council to consider charging GST on tour operators on 10% of the service charged or 1.8% of gross billing of the tour operator as compared to the present 5%.
In the letter, IATO has also requested that GST/IGST may be fully exempted on the services provided outside India -.in neighbouring countries even if the package includes an India tour. As a result of tax exemption, bookings will come to Indian Tour operators instead of such bookings going to tour operators based in neighbouring countries. This will add considerable foreign exchange for the country.
The letter also reiterated a long-standing demand to change the definition of export of services and the criteria of the place of supply based on the performance of services and accord Tourism industry status of deemed exporter at par with IT Industry.
According to Rajiv Mehra, President IATO, “The inbound tourism has been the worst hit and if we were to get these financial reliefs it will help us give us some strength to bounce back. Sincerely hope that our requests will be given serious consideration by the GST council. I would also request the Ministry of Home Affairs to start planning on opening an E-Tourist Visa in phases as Vaccination in many source markets like USA, UK and other European Markets are almost complete.
This can be done in stages and on reciprocal basis so that inbound tourism business can start which will not only revive economic activities but also will bring back jobs lost during the last 14 months.”
