“The travel and tourism industry has been experiencing robust growth post-pandemic, presenting an opportune moment for the upcoming Union Budget 2024-2025 to further this momentum. Strategic investments in our sector can unlock significant economic opportunities, boost employment, and enhance India’s tourism landscape.
A uniform GST rate of 12% on hotels & homestays would greatly simplify compliance and eliminate price disparities caused by fluctuating room rates. Currently, the tiered GST system based on hotel room tariffs creates confusion and administrative challenges, with room rates varying between 12% and 18% GST depending on the season. Simplifying this to a single rate would benefit both businesses and consumers, fostering a more consistent and transparent pricing structure.
Furthermore, allowing online travel agents (OTAs) to register through their central head office instead of obtaining state-wise GST registrations would reduce administrative burdens and increase efficiency. The current regulation, which compels OTAs to establish a physical presence in each state, leads to high administrative costs and places national OTAs at a disadvantage compared to international competitors.
We also urge the government to address the GST discrepancies between e-commerce operators and direct bookings, which currently disincentivize digital transactions. For instance, a customer pays a 5% GST charge when booking a non-AC bus through an e-commerce platform, while this charge is zero for direct bookings from bus operators. Harmonizing these rates would support the Digital India initiative and promote fair competition.
Moreover, allowing Tax Collected at Source (TCS) credit to be used against salary income tax would provide much-needed relief to taxpayers. Currently, TCS credit can be used against advance tax but not against income from salaries, creating an imbalance that needs rectification.
Encouraging corporations to invest their CSR funds in developing and improving tourist destinations can lead to sustainable development while offering tax benefits. A weighted deduction under income tax and input tax credit under GST on CSR funds deployed to improve tourist destinations would garner larger participation from the private sector. This symbiotic relationship not only helps preserve tourist sites but also ensures all-around sustainable development.
Tax incentives for adopting sustainable practices would also align with India’s commitment to the United Nations Sustainable Development Goals, particularly SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). By offering incentives that promote eco-friendly measures in the tourism sector, such as energy-efficient lighting, water-saving devices, and waste-reduction practices, the Hon’ble Finance Minister would encourage the industry to contribute to these global goals.
The hospitality sector deserves industry status to accelerate growth, recognizing its substantial contributions to GDP, employment, and foreign exchange revenues. Reducing GST, funding skill development, and promoting sustainable tourism are crucial steps for driving the sector forward. Additionally, recognizing the sector as an industry would provide significant thrust for companies to reinvest in growth, encourage more investments, and bolster job creation.
In conclusion, by addressing these key issues, the Hon’ble Finance Minister can ensure that the hospitality industry continues to thrive and contribute to India’s economic and sustainable development goals. A strategic and supportive budget will not only enhance the industry’s competitiveness but also position India as a premier global tourist destination.”
