Budget 2024: GST rationalisation, industry status, and infrastructure development on tourism sector’s wishlist

The tourism sector expects the Union Budget 2024 to fulfil its key demands for giving a boost to the growth of the industry.

Finance Minister Nirmala Sitharaman will present the Full Budget for the financial year 2024-25 on July 23. The travel and tourism industry players are hopeful of positive announcements for the sector amid the speculations of the Modi 3.0 government’s focus on growth and development.

The tourism industry has been pushing for various initiatives such as tax rebates, GST rationalisation, infrastructure development, easy visa entry policies, and industry status for all stakeholders that could pave the way for easy financing and ease of doing business.

The industry has been seeking the government’s attention on various issues as their key demands were not met in the Interim Budget for FY 2024-25, presented before the general elections in February.

The Finance Minister, in the Interim Budget, announced providing long-term interest-free loans to states to finance tourism infrastructure development on a matching basis.

She mentioned that states would be encouraged to take up the complete development of iconic tourist centres and also proposed a framework for rating the tourist centres based on the quality of facilities and services to be established.

The tourism industry welcomed these steps but expressed disappointment in other demands being ignored in the Interim Budget.

Ahead of the presentation of the Full Budget, the tourism industry expects the Finance Minister to announce more steps to boost growth in the sector.

Here are the key expectations of the tourism sector from the Union Budget for 2024-25:

Uniform GST rate

The tourism industry expects the Finance Minister to announce a uniform goods and services tax (GST) rate structure for hotel rooms and allow input tax credits for bringing down the cost of hotel stays. At present, a hotel room with ₹10,000 per night charges attracts 18% GST while a room with ₹7,000 rent attracts 12% GST. A uniform GST rate will end price disparities during peak and lean seasons and make hotel stays affordable. The industry is also expecting parity in GST rates among e-commerce suppliers and online aggregators.

Tax incentives

The industry has also sought tax incentives for the tourism sector. Removal of Tax Collected at Source (TCS) on outbound travel and on automated bookings, strategic income tax cuts, and tax exemptions on Leave Travel Allowance are some of the expectations for the tourism industry on the tax front.

The industry has also pitched for tax sops for hotels and homestays that are adopting eco-friendly measures and sustainable practices to reduce the carbon footprint. The sector expects tax incentives for promoting green measures such as water-saving devices, waste-reduction practices, and energy-efficient lighting.

Industry and infrastructure status

Tourism and hospitality players expect the Union Budget 2024 to grant priority sector status to the travel sector. The priority or infrastructure status would help them with cheap loans, easy financing, and ease of doing business. Tourism and hospitality sector accounts for an estimated 10% of India's GDP.

The industry has also sought infrastructure status for hotels and convention centres valued ₹10 crore and above for stimulating investment and growth.

Easy visa entry norms

The tourism sector has pitched for easy visa entry norms and free visa entry in some cases to boost foreign tourist footfalls. A cut in prices of aviation turbine fuels and taxes would boost air travel and aid the local travel industry.

Infrastructure development

Tourism industry stakeholders also expect measures to develop infrastructure, set up new airports, and fast expansion of rail, waterways, sea and river cruises, and roads. The industry players expect the development of religious circuits, wellness tourism, and the promotion of tourist spots like Lakshadweep.