Owing to the immense financial loss caused to the tourism sector due to the coronavirus outbreak, Tourism Ministry is now asking the government to eliminate Goods and Service Tax (GST) levy from the sector for the next six months, as declared by the sources.
The proposal was made after combined recommendations drawn from several tourism industries, including associations like the Indian Association of Tour Operators (IATO), Federation of Associations in Indian Tourism and Hospitality Is your business linked or related to hospitality and tourism Industry? Keep your eyes open to see GST impact on both industries with experts. Read More (FAITH), World Travel & Tourism Council, and the Confederation of Indian Industries.
The tourism ministry is all set to extend the recommendations to the Union Finance Ministry so that necessary steps could be taken as soon as possible and relief could be provided to the tourism sector in terms of tax payment. Tourism must be considered as one of the sectors that need immediate financial aid amid this pandemic.
The tourism sector has contributed significantly to the economy of the nations as the foreign exchange earned Rs 14,667 crores in March 2017, Rs 17,222 crores in March 2018 and Rs 16,125 crores in March 2019 from the sector alone. April forex figures were Rs 14,260 crores for 2017, Rs 15,620 crores for 2018 and 17,061crores for 2019.
Talking about domestic trade that manages to accumulate a major part of the trade with 1.5 billion tourist visits annually in India.in 2016, a total of 1.6 billion domestic visits were noted, 1.67 billion were noted in 2017 and 1.85 billion in 2019 were recorded. In 2019, India witnessed around 10.89 million tourist visits giving Rs. 2,10,981 crore to the country (as per forex figures).
Last year the GST council brought down the tax slabs for the tourism sector Have a look at the brief details of GST (Goods and Services Tax) impact on Hotel and Tourism industry after rate cut as stated by Industrial Experts. Read More reducing tax rates on rooms above Rs. 1000 to 18% (earlier 28%) and for rooms above Rs, 7,500 to 12% (earlier 18%).
As per the analysis given by the Federation of Associations in Indian Tourism and Hospitality (FAITH), around 4500 hotels have lost their business due to the pandemic that is hitting hard.
Subhash Goyal (chairperson of Assocham’s Tourism Council and honorary secretary of the FAITH), said that the estimates are achieved from the members of hotel associations. From 4,500 hotels 3,500 are completely closed having NILL business and the rest of them are operating with very less staff. Out of the staff that is still operative, many are working without pay and the misery may continue if the bailout package is not provided to the sector by the government, said Goyal.
Pronob Sarkar from IATO declared that April to July being cold months in terms of earnings, December to March are the months of earnings for the tourism sector and now with March being completely closed, people are working with very less or no pay. There is a threat of job losses if the tourism sector is not granted a bailout.
Seeking urgent improvements/reforms, the associations linked to the sector have written request letters to PM Narendra Modi and FM Nirmala Sitharam last week. In the letter, they declared that the estimated loss to the sector might exceed Rs. 5 Lakh Crore.
Coronavirus outbreak has led the tourism sector to bankruptcy (all over India), stagnant business and huge unemployment. It is estimated that around 70% of the sector workforce (which accumulates around 55 million direct and indirect workers) might lose their employment, said the letter written by the sector associations.
The letter further demanded to curb the outgo of EMIs on interests and loans that are taken from banks, financial institutions by the industries associated with tourism. The letter said to double the working capital limits. The tourism ministry asked for postponing the payment of GST dues Check out due dates of payment under GST for general and composition taxpayers in India. We have included penalty charges on late payment with interest. Read More, advanced tax, custom duties and grant of funds for salaries from the government.