Pre-Budget Memorandum Lists Industry Woes, Aspirations

Seeks Abolition Of Service Tax; Increase In Plan Outlay; Uniform Tax Structure

Jyoti Koul - New Delhi

A comprehensive set of recommendations have been drawn up by the Indian Association of Tour Operators (IATO) on behalf of the tourism and hospitality industry to be presented to the Central government before the Union Budget.

Some of the key demands in the memorandum include restoration of full income tax exemption under section 80 HHD of the income tax; abolition of service tax; abolition of luxury tax on foreign exchange earnings; rationalisation of transport taxes; increase in plan outlay; abolition of dual tariff and a uniform tax structure.

IATO’s initiative is consequent to the ministry of tourism’s annual exercise inviting a pre-Budget memorandum to make the government aware about the tourism industry’s problems and prospects so that the Union Budget can incorporate the concerns. The tax structure, being the major worry of the tourism industry, finds the most mention in this year's memorandum. There is also apprehension among the hospitality sector that the government might levy service tax and reimpose HET in tune with the changing of priorities at the Centre. "Last year the ministry of finance showed great appreciation of the needs of the industry by accepting a number of proposals in the Union Budget. The abolition of expenditure tax and many other tax benefits extended last year have greatly helped the industry and this has been the key factor for its growth in the current financial year. But when we compare ourselves with other countries in terms of tourist arrivals, our share is negligible and this is because of the heavy tax structure. Therefore, through this proposal we want the government to realise the multiplier effect of tourism on the economy. We are hopeful that the industry will get rid of the tax burden," said Major Murli Dhar, senior vice-president, Indian Association of Tour Operators (IATO).

Commenting on the memorandum, Renuka Chowdhury, minister of state with independent charge for tourism, government of India said, "We will have to meet the government half way to be really able to voice our concerns and that is why I have suggested the industry to prepare a common proposal on the needs and demands of the Indian tourism industry. I will do my best to convince the government that tourism is an answer to their dreams and I will see to it that industry does not get 'hurt' by the budget."