The Indian Association of Tour Operators (IATO), which represents more than 1,600 operators for inbound tourists, met with Finance Minister Nirmala Sitharaman to discuss key measures that could put the tourism industry on the path to recovery.
A delegation of representatives from IATO led by current President Rajiv Mehra and former President Pronab Sarkar thanked FM for authorizing SEIS (Service Export Program from India) for service providers and recent measures such as 500,000 free e-tourist visas for foreign tourists and the granting of government guaranteed loans to small tour operators. However, the delegation put forward several outstanding issues which, if resolved, may lead to a revival of tourism in the country.
The delegation asked not only to keep the 7% SEIS Scrips percentage given to tour operators over the past two years, but to increase it to 10%. If SEIS cannot be increased, it should be kept at 7% regardless of capping the tour operator’s turnover, they said. Under the SEIS program, the government offers incentives to all service providers who provide services from India to organizations outside the country.
The IATO delegation also discussed the cascading effect of multiple GST on tour operators and asked to remove this anomaly by charging GST on the total estimated value which could be 10% of gross billing from tour operators. . This will allow the service to be taxed at 18% on a 10% mark-up (their fee), meaning that the effective rate of GST on the total cost of the package will be 1.8% of the gross bill. from tour operator to customer with no input tax credit.
It has also been requested that GST / IGST be fully exempt on services provided outside India i.e. in neighboring countries even if the package includes travel to India as this results in a loss. activity for tour operators. Due to the tax exemption, bookings will come to Indian tour operators instead of these bookings will go to tour operators based in neighboring countries. This will add considerable foreign currency to the country.
Another issue that was addressed was the collection of withholding tax (TCS) on the sale of tour packages abroad and it was requested that the TCS not be applicable to people / companies who are citizens non-resident foreigners / tourists / foreign tour operators located outside India for the purchase of tour packages through a clearly specified Indian tour operator for outside India.
In addition, the issue of loans under the ECLGS has been raised, asking for the modification of the guidelines issued by the National Credit Guarantee Trustee Company Ltd (NCGTC), as banks do not accept requests from tour operators to benefit from the advantage of the ECLGS program. He was made to understand that revised directives were going to be issued to the banks.
The industry association also called on the finance minister to consider his long-standing demand to treat the tourism industry as a reputable exporter on par with the IT industry when it comes to exporting services. on the basis of their foreign exchange earnings by relaxing the parameters / definition of export of services and modifying the place of supply criteria.
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