Budget 2021 Expectations: Travel, Tourism sector expects pathbreaking Union Budget for post-Covid recovery

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New Delhi | January 18, 2021 2:45 PM

Union Budget 2021 Expectations for Travel, Tourism: With a focus on executing the Covid vaccination program in the country and increased burden on the exchequer, it seems less likely that Budget 2021 will relieve the tourism sector in the form of significant financial outlay, says Vivek Agarwal, Partner - Infrastructure, Government and Healthcare (IGH), KPMG in India.

Travel, Tourism Budget 2021 Expectations, Budget 2021 Expectations for Travel, TourismThe Federation of Associations in Indian Tourism and Hospitality (FAITH) is also looking forward to the Union Budget 2021 with great expectations. (Representative image by India in Congo Twitter)

Union Budget 2021-22 Expectations for Travel and Tourism: Hit hard by the Covid pandemic in 2020, the Travel and Tourism sector requires a pathbreaking Budget 2021, hope industry experts. However, given the massive Covid 19 vaccination program in India, Finance Minister Nirmala Sitharaman may not be in a position to announce significant financial outlay. However, people associated with the Travel and Tourism industry are hoping that the Narendra Modi government’s Budget 2021 will not only pull the sector out of the recessionary conditions but also enables the Indian Tourism industry to claim its rightful leadership place.

“With a focus on executing the Covid vaccination program in the country and increased burden on the exchequer, it seems less likely that Budget 2021 will relieve the tourism sector in the form of significant financial outlay. Accordingly, we believe that the Union budget announcement will have a greater appetite for revenue-neutral interventions,” Vivek Agarwal, Partner – Infrastructure, Government and Healthcare (IGH), KPMG in India.

“The revenue-neutral interventions are structural reforms for integration of regulation and approvals to move towards a one-stop-shop approval process for hospitality projects, revitalise the Incredible India campaign in preparation for 2023 when India will host the G20 summit, restructure and redesign current infrastructure schemes of MoT to encourage development focused on Return on Investment, tax benefits by moving LTC benefit to the next financial year, tax exemption on MICE events, GST restructuring for wellness and medical tourism businesses, and induce liquidity for tourism businesses by way of financial reforms such as provision of funding from non-banking institutions, alternate tourism investment fund to support ongoing hospitality projects, longer tenure of repayment of finances,” Mr. Agarwal said.

The Federation of Associations in Indian Tourism and Hospitality (FAITH) is also looking forward to the Union Budget 2021 with great expectations. The FAITH has proposed the creation of a National Tourism Council of Chief Ministers headed by Prime Minister Narendra Modi along with Tourism Minister. That should be supported by a common industry status across the country for the complete tourism industry by putting it in the concurrent list.

The FAITH has recommended export earnings be made tax free and also incidence of taxes in tourism earnings be zero rated. Additionally, ervice Exports from India Scheme (SEIS) of 10 per cent to all foreign exchange earning members in tourism be made applicable for 5 years to ensure a post-Covid recovery. A Global Mice Bidding Fund is required to be set up with Rs 500 crore to double India’s mice share. Indian missions abroad in each country should be activated with tourism resources for maximum reach. This needs to be supported with Corpus of least Rs 2500 crore is required for global branding budget to enable Sub Branding of three Tourism segments i.e. Indian MICE, Indian adventure, Indian Heritage under the Incredible India main brand, the FAITH has stated.

To ensure that the tourism industry becomes a mainstay domestic industry there needs to be a concerted strategy. There needs to be made an income tax exemption on travelling within India income tax credits for up to Rs 1.5 lakh when spending with GST registered domestic tour operators, travel agents, hoteliers, and transporters anywhere within the country. It is also needed to incentive Indian corporates to undertake domestic mice (meetings, incentives, conferences and events) by offering a 200 per cent weighted income tax expense benefit to Indian companies which are undertaking mice events in India. A Natural & Cultural Heritage Restoration Fund must be set up with a corpus of at least Rs 2000 crore which encourages sustainable and responsible development around each vertical of adventure tourism and cultural tourism. This will also be enabled by a truly seamless tourist transportation experience standardizing all tourism transportation taxes making them payable at a single point which will facilitate the ease of doing business, the FAITH has said.

“It is critical to protect the business of Indian travel agents and tour operators and a structured mechanism is required to future secure travel agents’ payments to ensure that security for travel agents and operators’ survival. This is key as Travel agents’ payments to principals are unsecured credit and some form of mechanisms whether escrow or guarantee or underwriting based mechanisms are needed to be in place to ensure that travel agents’ money stays secure,” the FAITH said.

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