Need for relook at tax rates to boost tourism sector: Industry

There is a need to reconsider tax rates to boost the tourism sector so as to compete in a global marketplace, industry players have said ahead of the upcoming Union Budget 2018-19.

Favourable policies and enabling environment will help boost the sector which is one of the key drivers in terms of employment generation and inclusive growth, they said.

"To compete in a global marketplace with countries like Thailand, Malaysia and Singapore in the region India needs to offer services at par with global rates," MakeMyTrip Founder and Group CEO Deep Kalra said in a statement.

Lower taxes rates in the hospitality sector in these markets have helped establish them as major tourist destinations while putting India at a disadvantage in terms of cost effectiveness for tourists, he added.
 

Highlighting the need to improve infrastructure in the country, Kalra said: "Infrastructure development is a pre- requisite for the industry and additional incentives for infrastructure development will attract private investment and help accelerate growth."

In a similar vein, Cox & Kings Group CEO Peter Kerkar said: "In order to boost domestic and inbound tourism, the government should reduce the GST, which is 18 per cent for hotel rooms rates in the Rs 2,500-7,500 category."

This is very high compared to competing destinations and hence it's important to rationalise this rate to stay competitive, he added.

For outbound tourism, the GST should be applicable only to services rendered in India and not on the entire Outbound Tour Package Value, he said.

This increases the cost of the holiday and it is unfair on the customers as he is forced to pay tax for services that he is not consuming in India, Kerkar said.

The tourism industry is one of the key drivers in terms of employment generation and inclusive growth, he added.