Govt mulling tax cuts, incentives in budget to boost tourism

Published on : Wednesday, January 10, 2018

Govt. mulling tax cuts,In an effort to boost the tourism sector, the Union government is planning to slash taxes on travel and tourism in next month’s Union Budget and extend more incentives to the $210-billion sector.


The tourism sector grew over 10 per cent in the six months ending September, compared to near 8 per cent in the year-ago period. According to an industry report, tourism employs 40 million people in India and could add 10 million jobs in a decade.


“We’ll announce measures in the budget to promote investment in the tourism sector,” a top finance ministry official told Reuters, adding that Finance Minister Arun Jaitley favours lowering a 28 per cent tax on hotel tariffs, and offering incentives to attract private investments.


If the moves come about, companies expected to benefit include airlines like IndiGo, owned by InterGlobe Aviation, and Jet Airways and hotel operators such as Indian Hotels, that owns the Taj Mahal chain and EIH Ltd that operates the Oberoi hotels in India. Tour operators including Cox & Kings and Thomas Cook are also likely to gain.


In India, tourists, on average, pay 30 per cent tax on hotel rooms and travel compared with less than 10 per cent in Singapore, Thailand and Indonesia, said Pronab Sarkar, president of the Indian Association of Tour Operators (IATO).


The country needs about 200,000 new hotel rooms, Tourism Minister K J Alphons told Parliament this week.


“We have reached a plateau point and need more resources to create new infrastructure and develop tourist packages,” Mr Alphons said adding there was huge potential in developing areas that were not the usual tourist destinations.


Prime Minister Narendra Modi has said developing tourism, particularly in the remote north-eastern states, is one of his top priorities.


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