The travel & tourism industry in India stands at a pivotal juncture, anticipating the revelation of the Interim Budget 2024-25. As the economic curtain ascends, the travel sector emerges as a crucial sector because of a large population whose livelihood depends on it. The stakeholders, like every budget, have high hopes, this time too.
Speaking to Fortune India on the travel industry's expectations from the government’s Interim Budget 2024-25, Rajesh Magow, MakeMyTrip's co-founder & Group CEO, talked about the present condition of travel industry infrastructure and what needs to be done to boost the sector that faced huge beating after Covid pandemic in India. "Rationalising GST rates and allowing for GST credit could lead to more affordable hotel stays. Such a move by the Finance Minister (FM) would not only make accommodations more accessible to tourists but also encourage further investment in the sector and increase India’s organised hotel supply," says Magow.
He also underscored the substantial share of operational expenses attributed to Aviation Turbine Fuel (ATF) and a policy framework, including central excise and customs duties, to indirectly address ATF costs. A reduction in ATF costs, Magow proposes, could trigger a chain reaction, boosting air travel frequency, airport revenues, and connectivity to diverse tourist destinations. Magow also seeks visa-free entry for travellers from India's top fifteen feeder markets. Additionally, he notes the potential for CSR funds to enhance tourist destinations, advocating for tax benefits to incentivise private sector involvement.
Anand Ramanathan, partner, products & retail sector, Deloitte India, says as an industry practice, in case of sale of airline tickets, an e-commerce operator deposits TCS on its own and later recovers that from the airline. This leads to the blocking of funds for an e-commerce operator for a considerable time. Thus, compliance with TCS provisions vis-à-vis airlines is causing great economic hardship to online travel agents who are committed to ensuring full compliance with GST laws.
"The intention of TCS provisions was to avoid tax evasion by suppliers listed on the ECO platform. As the aviation industry is the most organised sector and regulated by IATA, provisions of TCS should be amended to exclude taxable supplies by an airline," writes Ramanathan.
Brokerage major Sharekhan says the Union Budget 2023 provided a substantial boost to tourism through increasing spending on infra by building more airports and increasing the budget for railways, roads, waterways, and infrastructure development. "The government might maintain the momentum in the Interim budget 2024 by announcing policies that will support the resilience of the tourism sector and required infrastructure boost to increase the room supply to reduce the gap between the room demand and supply in the coming years."
In her last year’s budget, the FM while announcing the budget had said the country offers immense attraction for domestic as well as foreign tourists. “There is a large potential to be tapped in tourism. The sector holds huge opportunities for jobs and entrepreneurship for youth in particular.”
She also talked about the promotion of tourism being taken up on a “mission mode”, with active participation of states, convergence of government programmes and public-private partnerships.
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