While India’s brand as a tourist destination has become more globally prominent than ever before, investing in tourism-centric infrastructure could help make our country’s beauty more accessible to its citizens and international tourists. Countries like Kenya have created a wonderful travel-friendly ecosystem, and the focus and prominence it receives as an industry could be a guide to Indian authorities.
In the shorter term, there have been some issues that the Budget can look to resolve for the travel and hospitality industry which have been limiting the growth of tourism in India. Hotels in India have to cater to a variety of demographics at various price points, and determining their tax liability must be done with care.
The 28% tax on AC hotels levied under GST is not only much higher than other economies like Singapore, but also unfairly clubs high-end luxury resorts with mid-level hotels and lodges. GST has also created a problem for aggregators. While GST effectively reduces the tax rate from 9% to 5% for package tours, while not providing them the required input credits. This raises the cost to customers, because aggregators will have to pay the tax even when they source services from smaller providers. The government should be encouraging aggregation, as it increases convenience and access for travellers, domestic and foreign.
(Jayanth Sharma is Co founder and CEO, Toehold)
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