Budget 2014 was a directional Budget. Can you explain the same?
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Anil Harish
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In para 4 and 7 of his speech the finance minister has stated that it is a directional Budget as I feel perhaps on account of paucity of time, much has not been done in this Finance Bill, but there is a clear direction given as to what is going to be done in the near future. Budget 2014 was truly a rare budget for tourism with few interesting announcements being made.
If analysed closely what are the real-time implications and benefits for the hospitality and tourism sector?
Tourism is practically entirely run by the private sector. The role of the government must be to encourage and facilitate and to provide infrastructure. An important facility announced has been the evisa facility. Further, even the setting up of Smart Cities and Industrial Corridors will mean that there is a need for tourism.
What are the primary highlights of the budget for this industry?
The highlights for tourism and hospitality are primarily in a directional sense and not on account of any immediate tax saving measures in the statute. The reference is to – Smart Cities; Industrial Corridors; general emphasis on business; setting up of new airports; development of roads; five new tourist circuits around specific themes; National Mission on Pilgrimage; Rejuvenation and Spiritual Augmentation Drive (Prasad); National Heritage City Development and Augmentation Yojana (Hriday); development of the Sadhana-Gaya-Varanasi Buddhist circuit; major International Convention Centre to be set up in Goa.
What needs to be implemented with immediate effect?
The finance minister has already stated that some of these things will come in quickly such as the e-visas and the integrated platform for the central government. The laws relating to SEBI, Income- tax and FEMA will have to be synchronised and that should bring in a substantial amount of capital and the real estate industry and the tourism industry from the debt burden to some extent. REIT (Real Estate Investment Trust) and InvIT (Infrastructure Investment Trust) also received mention. REIT and InvIT are structures whereby investors, both domestic and foreign, will be able to participate in the development and get appreciation on their investment. REITS have found favour in other countries as investment vehicles midway between debt and equity, in that they are fairly stable such as debt and yet have the potential for appreciation as in equity. India did not have a tax favourable investment structure for REITS. However, SEBI has drafted Regulations for REITS, but these will have to be modified to bring them in line with the amended proposals in the Income-tax Act. The Regulations under FEMA will also have to be amended in order to permit non-resident participation. Accordingly, there is still a substantial amount of work to be done on REITS and InvITs, but when this is done these should attract substantial investment from within India and from overseas.
Is it an investor friendly and tax friendly Budget?
It is a reasonably investor-friendly Budget showing that there will be emphasis on tourism and real estate, industry and development and therefore there is hope for the future. It is not a specially tax-friendly Budget and there are no major concessions given and the rates of tax have remained approximately the same.
