SAYONI BHADURI – Mumbai
The finance minister turned a deaf ear yet again, with no mention of the hotel industry in his Union Budget 2012-13. This comes as a big disappointment, in the wake of the positive result of the high level presentation made to the Prime Minister by minister of tourism Subodh Kant Sahay last year. Increase in service tax and excise duty together with MVAT implication on all assessees and the TDS levied on our asset heavy immovable properties do not seem to make the hotel business easier. The only positive aspect has been the extension of 35AD of the Income Tax Act and the inclusion of hotel industry as Harmonised list of infrastructure sub sectors.
Kamlesh Barot, president, Federation of Hotel & Restaurant Associations of India (FHRAI) and director – VIE Hospitality said, “The debacle on service tax has been given an eye-wash by counterbalancing it with the reduction of cascading effect of service tax with input credit availability. Whereas, all this will have an effect on the foreign tourist arrivals, as our destination will become more costly compared to our neighbouring countries, the outbound should not be impacted by this budget. We had been pleading for two inclusions in our pre-budget memorandum this year which have fructified, one being the extension of 35AD of the Income Tax Act to operators over and above it being available to owners; the second one being the inclusion of the hotel industry in the Harmonised list of Infrastructure sub-sectors for three-star or higher category classified hotels located outside cities with population of more than one million. These two will have a long term benefit for the hotel industry.”
The increase in service tax however will remain the bane of the hotel and tourism industry as a whole. Sonica Malhotra, director, MBD Group said, “The proposed increase in the service tax from 10 to 12 per cent and broadening the base of service tax applicability by including all service except specified in the negative list will increase the cost of services in the travel and tourism sector.” Subhash Verma, president of Association of Domestic Tour Operators of India (ADTOI) shared the same opinion adding, “There is no incentive, direct or indirect, to motivate Indians to travel within India. Its very unfortunate that the government does not think of this industry as a preferred one at all being a major employment generator and playing a holistic multiplier role for growth.”
Subhash Goyal, president, Indian Association of Tour Operators (IATO) opined, “Contribution of tourism sector toward country’s GDP (which is more than six per cent) and more than nine per cent to employment is always ignored. It is time the decision makers show commitment towards tourism as major force for the country’s economic growth.” “There is nothing significant in this budget for the travel and tourism industry. Like in all the previous budgets, the industry has been ignored. The industry which is a major employment generator has been slapped with higher taxation which is a retrograde step by the government,” said Ajay Prakash, president, Travel Agents Federation of India (TAFI).
(With inputs from Kahini Chakraborty)
