The travel and tourism sector represents a vital economic driver. The World Travel & Tourism Council (WTTC) 2024 projects that travel and tourism will contribute almost INR 21.15 trillion to India’s GDP in 2024, a marked 21% improvement compared to 2019. Jobs are predicted to increase by 2.45 million this year, representing one in every 11 jobs in the country.
India’s travel and tourism sector represents a strong force multiplier across allied sectors, employment generation, and foreign exchange receipts. Our expectations from the Union Budget include key pivots to transform India into a travel destination of choice:
Infrastructural Focus: As a key fundamental for the sector, setting up new airports via private participation must become a priority, thus creating a viable hub-and-spoke model. There must also be a rapid expansion in rail, road, and waterways (sea and river cruises). Additionally, infrastructure development is needed for high-growth areas like religious circuits and underleveraged hidden gems such as Lakshadweep.
Inbound Tourism: Revival of the inbound incentive scheme, but for select destinations.
Tax:
• Reduced income tax levels to provide increased disposable income in the hands of the people. This will boost travel and tourism spending.
• LTA exemption annually, against twice in four years to catalyse domestic tourism.
• We would recommend lowering TCS to 1%; if not, a standardisation at 5% on foreign travel packages (against the current 5% and 20% slabs).
• Clarification on the applicability of Section 194O on e-commerce: This defeats the government’s focus on digital India and ease of doing business.
• Section 53 of GST should exempt travel agents. There is no revenue loss for the government, as airlines are already discharging tax on their sales.
• Clarity wrt TCS on Forex card payments.
GST is a key area, and our wish list for budget 2024–25 includes:
o Allow GST input credit facility for inbound and domestic tourism
o Centralise similar issues faced by a single assessee in multiple states, reducing unwarranted time, effort, and litigation in multiple jurisdictions
o Simplify the compliance mechanism in filing reports, reconciliations, and audits
Additionally:
• For technical matters, amendments, and interpretation, we recommend a collaborative approach between the authorities and tourism stakeholders towards better understanding and compliance.
