Kolkata: As the Union annual budget approaches, the travel and tourism sector has urged the government to bolster the current growth with targeted measures like granting the long-requested industry status, which will further encourage investment and development in the hospitality sector in India.
“ The travel and tourism sector is a vital pillar of India’s economy, contributing over 9 percent to employment and supporting 40 million jobs – a figure set to exceed 62 million in the next decade,” according to MakeMytrip Group CEO and co-founder Rajesh Magow.
The sector’s role in driving economic inclusivity, empowering communities, and boosting economy at the grass roots level makes it indispensable to the next chapter of India’s growth story, Magow said in a statement on Wednesday.
He said allowing GST credit for hotel construction and rationalizing GST rates will help reduce the overall cost of accommodation and stimulate domestic tourism and positively impact inbound tourism.
” The industry would be delighted if the Finance Minister allocates resources for an international campaign under the Incredible India initiative,” he remarked.
The sector is outpacing the overall economy, with domestic tourism growing at a double-digit rate, driven by rising incomes, a burgeoning middle class, and a preference for travel experiences. The government investments in roads, airports, and railways have been game-changers, enabling faster travel and unlocking new destinations. Long weekends
are now synonymous with travel – a testament to the sector’s growing momentum.
The homestay sector is growing well in India, and this burgeoning sector needs support, he added.
The government’s clarification in the last budget, stating that any rental income earned by the owner of residential house property shall be treated as ‘Income from House Property’ instead of ‘Business Income,’ can adversely impact the growth of homestays, Magow pointed out.
” We request the Minister to review this point,” he continued. Besides, there are a couple of other operational, and disparity related GST issues faced by Online Travel Agents (OTAs). Mandatory state-wise GST registration with a physical presence in every state is adding to the administrative costs and management overhead unnecessarily. Since the nature of OTAs business is online, if registration in different states can be allowed using their central
head office address will help in streamlining operations, reduce costs, and improve efficiency.
” Moreover, this requirement will help put Indian OTAs on level playing field against international online players who are not bound by similar rules,” he maintained.
Similarly, there is an existing disparity in the GST charge for customers booking a non-AC bus through an online booking platform where customers are charged 5% GST, while direct bookings made with the bus operator there is no GST charge. This inconsistency undermines the objective of the Digital India initiative and is against the spirit of digital India.
“The government has laid a strong foundation – this budget is an opportunity to propel the sector into its next phase of growth,” Magow concluded.
