The hospitality and travel industry advocates are pressing for significant changes ahead of the Union Budget. They emphasize the need for the hotel industry to be granted infrastructure status, a demand that has been persistent for years. This status would facilitate easier access to affordable debt, aligning it with other industries and influencing project completion and overall financial health.
To boost domestic tourism, several recommendations have been proposed. These include tax exemption on Leave Travel Allowance (LTA) annually, the removal of the current TDS on automated bookings, and a reduction in the number of licenses required to establish a hotel. A central single-window clearance for hotel projects is also being urged.
In the realm of taxation, the industry seeks a reduction in income tax levels to increase disposable income for individuals, thus encouraging travel and tourism spending. Further suggestions include annual tax exemption on LTA, twice in four years, and standardization of Tax Collected at Source (TCS) at 5% on foreign travel packages, replacing the current 5% and 20% slabs. Additionally, there is a call for a reconsideration of GST rates on hotel room tariffs of Rs 7,500 and above. The proposal is to lower the current 18% to 12%, as it is deemed high in the competitive landscape. While acknowledging a previous reduction in 2019 from 28% to 18% for such tariffs, there is a renewed plea for a more competitive GST rate to further support the industry.
Amidst these recommendations, there is a broader appeal for a multi-faceted approach in the upcoming budget to catalyze growth in the travel and tourism sector. The removal of impediments to technology, such as the current TDS on automated bookings, is underscored as crucial for aligning with the government’s commitment to ease of doing business and digital adoption, fostering a Digital India.