Industry shows mixed reactions, gives hike in ST a thumbs down

The hospitality sector was expecting a growth based budget with specific announcements including rationalisation of the tax structure to easening of business through single window clearance

FHW StaffMumbai

The hospitality sector was expecting a growth based budget with specific announcements including rationalisation of the tax structure to easening of business through single window clearance. With the rise in service tax to 16 per cent (including two per cent Swachh Bharat tax), the already bleeding hospitality industry is once again at the suffering end. Some of the mixed reactions from the industry.

Bharat Malkani, president, Hotel And Restaurant Association (Western India) said, “After raising extremely high hopes and optimism the ministry has failed to match up to the expectations. In the budget 2015-16, the government has proposed increase in Service Tax (ST). According to us, ST is an irrational inclusion in the ever increasing tax list and additional burden on the industry. This is directly going to impact the customers. We had expected that this ‘Pro-Tourism’ Ministry would concentrate on some critical areas keeping in mind the hospitality point of view. But this is a major disappointment. Unless the government recognises the pain that this industry is experiencing and takes rapid effective measures to counter such problems, we see a further erosion of the sustainability of Indian hospitality industry.”

Krish Iyer, chairman, FICCI Retail Committee and CEO Walmart India said, “Holistically looking, this Budget is reformist and growth oriented. The measures outlined in the budget for giving boost to investment in infrastructure will surely benefit the economy and retail sector in the medium to long term. In addition, moving towards making India a ‘cashless society’ will help facilitate retail trade too. FM’s proposed roadmap to reduction in Corporate Tax from 30 per cent to 25 per cent over four years while at the same time removing plethora of exemptions, which led to complexity and litigation, is a welcome step towards simplification and will also be received well by all investors. Implementation of GST from next year will not only bring relief to the end consumer, but also help retail sector in a big way. Government’s continued focus on ‘Ease of Doing Business’ will help the industry tremendously.”

Y Rajeev Reddy, CMD, Country Club Hospitality & Holidays said, “With a new visa on arrival policy we have made the world a global playground and this will be a great impetus to travel and tourism industry. With this move, we are confident that the tourism industry will make a quantum leap in growth. This will have a direct impact on aviation, infrastructure like airports, hotels, resorts and will also attract global skill sets which will make India a strong global visible player.”

Jaideep Ghosh, head of tourism and hospitality sector, KPMG – India said, “The proposed increase in the number of countries under the Visa on Arrival scheme, should catapult the inbound foreign visits to exceed eight million in the current calendar year. Announcements on conservation and promotion of World Heritage Sites are welcome, however this needs to be done as per international standards. Other initiatives such as Swacch Bharat, Clean Ganga, smart city, women safety, and tax benefits to Yoga need to be widely communicated to create a positive tourism environment. Overall the sector would benefit by investment in infrastructure, ease of doing business, Make in India related impetus and a more predictable tax environment assured by the FM.”

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