Ahead of the Budget, the Federation of Hotel and Restaurant Associations of India (FHRAI) has urged the government to rationalise taxes and amend policies for aligning the tourism sector.
In the pre-Budget memorandum submitted to the Ministry of Tourism (MoT) and Ministry of Finance (MoF), the association has asked for GST, availing of Export Promotion Capital Goods (EPCG) scheme and Service Exports from India Scheme (SEIS) without a Classification mandate, issuance of tax-free 'Hospitality Infrastructure Bonds'.
"The hospitality industry has been at the receiving end for last few years, but with the government's focus on tourism development, things may be turning around for hospitality too.
However, besides campaigns and promotions, the ministries will also have to revisit and remodel some of the prevailing tax structures, laws and policies to bring it at par with competing tourism economies of the world," FHRAI and Hotel and Restaurant Association of Western India (HRAWI) president Bharat Malkani said.
He said for instance, India's neighbouring South-East Asian countries like Thailand and Malaysia have a GST of 7 and 6 percent, respectively.
"In contrast, GST applicable for hotels in India amounts to a whopping 25-30 percent. Our industry is competing with a difference of roughly 20 percent, while matching with the global service amenities and requirements. Also, we hope that the government considers granting infrastructure status to hotels with a project cost of Rs 25 crore against the present Rs 250 crore," he said.
On policy initiatives, FHRAI has suggested increasing the threshold limit of Rs 25,000 to Rs 1,00,000 for payments to hotels and restaurants against bills raised, and to allow bank loans up to Rs 10 crore per unit or borrower extended to hotels and restaurants and be reckoned as 'priority sector lending' within the RBI guidelines, he said.
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