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gst: Infra status, rationalisation of GST on hospitality sector’s budget wish list

Infrastructure status for the hospitality sector, putting tourism in the concurrent list, export status for tourism earnings and further rationalisation of the goods and services tax (GST) are among the key expectations of the tourism and hospitality sector from this year’s central budget.

Aashish Gupta, consulting CEO for industry body Federation of Associations for Indian Tourism and Hospitality (FAITH) said the other expectations and suggestions also include having a robust forex earnings incentives scheme, creating a domestic travel tax credit policy, setting up a natural and cultural heritage restoration fund, developing a seamless national tourist transportation policy, and creating an underwriting fund for travel agents and tour operators.

The industry has been clamouring for an infrastructure status for decades, said Kush Kapoor, CEO of Roseate Hotels & Resorts. “The status will enable hotel projects easy access to cheaper debt that is at par with projects in other industries. Reduced capital cost will have a bearing on both timely completion of projects and their overall financial health,” he said.

While tourism and hospitality in India are currently witnessing a boom, the industry still requires government’s support to fully recover, said Ritesh Agarwal, founder and group CEO of Oyo.
“One key ask from the government would be to grant industry status to tourism and accordingly incentivise all states upon implementing tourism friendly policies. We would urge the government to reconsider the 12% GST currently levied on room tariffs below Rs 1000 per night,” he said. “With the current geopolitical tensions and inflationary pressures, travel costs have risen. Current rates make it difficult for people to find an affordable stay when travelling,” he added.

Rajesh Magow, co-founder and group CEO of MakeMyTrip, said the Indian travel and tourism industry has shown ‘great resilience’ and bounced back from the brunt from the pandemic.

“Domestic leisure travel has recovered well past pre-pandemic levels, though the long-haul international travel still lags. At this crucial juncture, the industry needs support from the government to ensure that it continues to be the one of the foremost employers in the country,” Magow said adding that tourism exports should be treated at par with other exports and services and such transactions should be zero rated for GST without stopping the flow of input credits.
He also said there needs to be a level playing field for offline and online bookings for buses and hotels and the requirement for obtaining registration for all states and union territories should be done away with for online travel platforms.

Manish Rathi, co-founder and CEO of IntrCity SmartBus, said he hoped the government would dedicate more attention on targeted measures to promote shared mobility for long travel routes and take steps to promote green fuel that will improve efficiency and reduce costs.

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