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HomeNewsBusinessBudgetUnion Budget 2024: From uniform GST on hotel rates to tax incentives, here’s what MakeMyTrip CEO Magow expects

Union Budget 2024: From uniform GST on hotel rates to tax incentives, here’s what MakeMyTrip CEO Magow expects

Budget 2024-25: Rajesh Magow, Co-founder & Group CEO of MakeMyTrip thinks the time is right for the FM to build on the momentum the travel and tourism industry is in at the moment and introduce certain changes that would incentivise the players

July 03, 2024 / 15:55 IST
Rajesh Magow, CEO, MakeMyTrip

Rajesh Magow, CEO, MakeMyTrip

In the interim Budget presented by Union Finance Minister Nirmala Sitharaman in February 2024, she had increased the allocation for the tourism sector to Rs 2,449.62 crore, about 44.7 percent more than the revised figure for the current fiscal.

Rajesh Magow, Co-founder & Group CEO of MakeMyTrip thinks the time is right for the FM to build on the momentum the travel and tourism industry is in at the moment and introduce certain changes that would incentivise the players.

He said, “The Travel and Tourism industry has been growing at a healthy rate post-pandemic. The upcoming Union Budget 2024-2025 offers an opportunity for the Hon’ble Finance Minister to build on this momentum. Strategic investments in this sector can unlock economic opportunities, boost employment, and enhance the competitiveness of India's tourism landscape.”

Here are the MakeMyTrip CEO’s Budget 2024-2025 expectations for the travel and tourism industry:

Uniform GST On Hotel Rates: The tiered GST based on hotel room tariffs can lead to price disparities as hotels adjust room rates based on demand and peak season rates. For example, a room night costing Rs 10,000 falls under the 18 percent GST rate, while an off-season rate of Rs 7,000 falls under the 12 percent GST rate. A uniform GST rate of 12 percent on hotels would help simplify the compliance processes, he said.

Registration Of OTAs: Online travel agents (OTAs) in India are struggling with the challenging requirement of obtaining state-wise GST registrations. The current regulation compels OTAs to establish a physical presence in each state even when it is not required, leading to high administrative costs. Allowing OTAs to register in state(s) through their central head office would significantly alleviate these burdens, streamline operations, and enhance efficiency. Furthermore, this requirement puts national OTAs at a disadvantage compared to international competitors who are not subjected to similar regulations.

Remove Disparities Between E-Com Operators & Suppliers: Magow said, “We urge the Finance Minister to remove disparities between ecommerce operator and ecommerce suppliers in domestic market. For example, currently, a customer pays a 5 percent GST charge when booking a non-AC bus through an ecommerce platform. This charge is zero for a direct booking from bus operator irrespective of whether it is done in online or offline mode. This is against the spirit of digital India.”

Changes to TCS Credit Rules: Travel agents, tour operators, and authorized dealers are required to collect Tax Collected at Source (TCS) on Overseas Tour Program Packages (OTPP) and Income Tax Act allows taxpayers to use TCS credit when calculating their advance tax, it does not currently permit applying this credit against income tax under 'Income from Salaries'. “We urge the Finance Minister to allow TCS credit under Section 206C(1G) to be used against salary income tax, thereby providing necessary relief to taxpayers,” the MakeMy Trip CEO said.

Encourage CSR Spend on Improving Tourism: Addressing the challenge of overcrowding in popular destinations requires innovative and sustainable solutions, and Finance Minister Nirmala Sitharaman could encourage corporations to invest their CSR funds in developing and improving tourist destinations. This approach can lead to developing new attractions and upgrading existing ones while offering tax benefits to the corporations involved. A weighted deduction under Income tax along with input tax credit under GST on CSR funds deployed to improve tourist destinations will garner larger participation from the private sector. Such a symbiotic relationship not only helps preserve tourist sites but also ensures all-around sustainable development.

Tax Incentives For Sustainable Approach: Offering tax incentives to hotels and homestays for adopting sustainable practices aligns with India's commitment to the United Nations Sustainable Development Goals, particularly SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). By offering tax incentives that promote eco-friendly measures in the tourism sector, such as energy-efficient lighting, water-saving devices, and waste-reduction practices, the FM could encourage the industry to contribute to these global goals.

Moneycontrol News
first published: Jul 2, 2024 06:20 pm

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