The proposed hike in service tax to 14 per cent will adversely affect the hotel industry, a parliamentary panel has observed and asked the Tourism Ministry to take up the issue with Ministry of Finance for seeking relief for the tourism sector.
The Standing Committee on Tourism headed by TMC MP Kunwar Deep Singh in its report, submitted in Parliament today, said India already has a higher hotel tariff due to multiple tax regime both at the state and the Centre.
The 31-member committee, therefore, recommended that the Ministry of Tourism may actively take up this matter with the Finance Ministry so that some sort of relief may be available to the tourism sector in the coming years.
There are various indirect taxes applicable to tourism industry such as service tax on room rents, restaurant services, banquet services, convention services, rent-a-cab services, dry cleaning services, health club/beauty parlour services, Internet services and money changing services.
Besides, VAT on sale of food and beverages in restaurants and banquet arrangements, state excise on alcoholic beverages.
Apart from this, luxury tax on room rentals, entertainment tax on casinos, discos, video game parlours, state entry permit, road tolls.
The direct taxes which are applicable to the sector are corporate tax, wealth tax, and taxes on immovable property.
The additional burden on hotel, restaurant and transportation will discourage the middle class tourists, both domestic and foreign from visiting tourist places, the report said.
The committee has expressed its disappointment to find the lack of concrete action plan to develop and integrate all important Buddhist centres in the country.
It noted that the pace of work in development of Buddhist Circuits is very slow and it needs to be expedited in big way.
The committee also observed that many tourists are availing services of roadside dhabas and eateries, but they are functioning without much help and assistance from the government agencies.
It has recommended that these need to be guided/helped in all possible manner for making them tourist-friendly, cleaner, hygienic with serving local cuisine in local ambiance and incentivised to serve the tourist better.
The committee has also recommended that the TV commercial campaigns and the print media campaigns should be spread throughout the year to spread awareness about tourism.
