Union Tourism Ministry suggests a GST revision and 'no-tax' to recover current losses

The ministry had sought recommendations from IATO), FAITH, World Travel & Tourism Council, and the Confederation of Indian Industries.

GST  tourism, GST revision during COVID-19, Union tourism ministry, Financial bailout for India's hospitality sector, Federation of Associations in Indian Tourism and Hospitality, World Travel & Tourism Council, Global coronavirus disease, Confederation of Indian Industries, GST Council, GST for rooms, Union finance minister, Nirmala Sitharaman

The Union tourism ministry may ask for a revision of the Goods and Services Tax (GST) for the tourism industry, and that earnings of the sector be made tax free for the next six months in view of the losses it has incurred due to the global coronavirus disease (Covid-19) pandemic, according to officials familiar with the matter, Hindustan times reported.

The ministry had sought recommendations for the sector from industry bodies, including the Indian Association of Tour Operators (IATO), Federation of Associations in Indian Tourism and Hospitality (FAITH), World Travel & Tourism Council, and the Confederation of Indian Industries on March 19. The ministry will send these recommendations to the Union finance ministry’s task force with a request to include tourism as one of the sectors that need a financial bailout, said a ministry official requesting not to be named.

In the domestic trade, which accounts for the major chunk of the trade, over 1.5 billion tourist visits are clocked in annually. In 2016, there were 1.61 billion domestic visits, 1.67 billion in 2017, and 1.85 billion in 2019.

The GST Council tweaked tax slabs for the industry in September last year. The GST for rooms with tariffs of Rs 7,500 and above was brought down from 28% to 18%, and for rooms that cost between Rs 1,000 and Rs 7,500 from 18% to 12%.

The travel, tours and hospitality associations have already written letters to Prime Minister Narendra Modi and Union finance minister Nirmala Sitharaman last week seeking an immediate intervention. They have estimated losses in excess of Rs 5 lakh crore to the tourism industry and almost twice that allied economic activity.

In the letter, the industry bodies have asked for a moratorium of 12 months on EMIs and interest on loans from all financial institutions, as well as the doubling of working capital limits. They have demanded a deferment by a year for payment of all dues such as GST, advance tax payments, Customs duties, and a fund to support salaries.

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