India’s travel and tourism sector is hoping that the Budget won’t leave them behind

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India’s travel and tourism sector is hoping that the Budget won’t leave them behind
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  • While the Union Budget hasn’t traditionally doled out reforms for the hospitality sector, after a year of losses due to the COVID-19 pandemic, the travel and tourism industry will look at Nirmala Sitharaman to help the sector until demand revives.
  • Reforms is the one big word that every entrepreneur, every operator in this country is expecting specifically, from a travel and tourism fraternity perspective, said Ritesh Agarwal of OYO.
  • According to the Hotels Association of India (HAI), about 70% of the direct jobs in the hotel sector are at risk while 40% of all hotels in India are on the brink of permanent closure.
India’s travel and tourism industry believes that Budget 2021 can’t not bring in relief for the battered sector.

“It is the most impacted and has the capability to recover quickly as it has small businesses in this segment. Hence, it's crucial for the small businesses to get all types of motivation and help. We have already started seeing a lot of support coming in from various support programs, and we hope for more,” said Ritesh Agarwal, Founder & Group CEO, OYO Hotels & Homes at the recently held Resurgence TiEcon Delhi – NCR event.

While the Union Budget hasn’t traditionally doled out reforms for the hospitality sector, after a year of losses due to the COVID-19 pandemic, as people stayed home and flights continue to stay banned in several countries, including India, the travel and tourism industry will look at Nirmala Sitharaman to help the sector until demand revives.

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According to the Hotels Association of India (HAI), about 70% of the direct jobs in the hotel sector are at risk while 40% of all hotels in India are on the brink of permanent closure.

And they have come with their own laundry list of expectations of budgetary provisions, better regulations, and policy decisions.

Infrastructure status



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Giving infrastructure status to hotels is a top demand from the industry which will give them access to better credit. “Doing so will allow businesses to avail electricity, water, and land at industrial rates along with improved lending rates,” said Bhanu Chopra, Founder and Chairman, RateGain.

The HAI has also recommended hotels of above ₹25 crore capex (excluding land) should be declared as infrastructure.

Increase Leave Travel Allowance



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“One could expect a tweak with Leave Travel Allowance (LTA), which is a tax break on travel expenses that can be claimed twice in a block of four years. You might see certain relaxations there, which allows more domestic travel or it could be that instead of twice in four years, you increase that number. The additional increase is only if you actually travel,” said Hemal Zobalia, Deloitte Haskins & Sells LLP told Business Insider in an interview.

HAI in its list of recommendations to the government has also said that there should be a modification of rule. “Government may modify the rules and allow citizens to avail LTA benefits for hotel stays too for a period of two years. LTA exemption to be available annually,” said the HAI spokesperson.

Income Tax and GST relief



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The industry is also rooting for income tax reductions which will increase the cash flow of businesses. Currently, the income tax rate is 30% plus surcharge of 7% or 12% (based on income) as well as 4% education cess.

“Several taxpayer-friendly amendments like GST relief in case of bad debts and relaxation in the ineligible list of input tax credit are much needed by the industry during the ongoing Covid times,” said Tushar Aggarwal, Founder Partner, Tattvam Advisors.

A Natural & Cultural Heritage Restoration Fund of ₹2,000 crore



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To boost domestic tourism, Federation of Associations in Indian Tourism and Hospitality (FAITH) has suggested setting up a Natural & Cultural Heritage Restoration Fund with a corpus of ₹2,000 crore. This, the association believes will encourage “sustainable and responsible development around each vertical of adventure tourism & cultural tourism.”

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