The President of the Indian Association of Tour Operators (IATO), Mr. Rajiv Mehra, has written a letter to the Prime Minister requesting for incentives to revive the tourism industry, which has been severely impacted by the pandemic.
IATO Proposes Measures to Support Struggling Inbound Tourism Sector
The IATO has proposed two solutions.
- The restoration of the Service Export Incentive Scheme (SEIS)
- The introduction of a new scheme in the upcoming Foreign Trade Policy.
Additionally, the association has asked for a rollback of the Tax Collected at Source (TCS) on Overseas Tour Packages from 20% to 5%, which was announced in the Union Budget.
These measures aim to provide much-needed support to the struggling inbound tourism sector, which requires assistance from the government to recover.
Request for Government Support to Promote Indian Tourism Industry
According to the letter, implementing the proposed measures would allow the Indian tourism industry to compete with foreign tour operators.
In addition, it will help them achieve parity with neighbouring countries.
As the current G-20 presidency aims to promote tourism, it is essential for the government to support the struggling tourism sector.
The letter emphasises the significance of the government’s assistance in ensuring the revival and growth of the industry.
Indian Inbound Tourism Industry Suffers Setback Due to COVID-19 Pandemic
Furthermore, Mr. Mehra highlighted the severe impact of the COVID-19 pandemic on the Indian inbound tourism industry.
According to him. Tourist industry has only seen a meagre 30-40% revival post the resumption of international flight operations and tourist visas.
The Indian Association of Tour Operators (IATO) has urged the government to either restore the Service Export Incentive Scheme (SEIS) or introduce an alternative scheme in the Foreign Trade Policy 2023 to support the tourism sector.
The letter also pointed out that it took nine years to increase foreign exchange earnings from US$14.49 billion in 2010 to 30.05 billion in 2019.
However, the current figures have regressed to the level of 2004 at only 6.17 billion.
These statistics indicate the immense stress and challenges faced by the struggling industry.
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Indian Tour Operators Face Challenges with High Taxes and Lack of Government
According to Mr. Mehra, the Indian tourism industry needs to compete with neighbouring countries, but the lack of marketing and promotion support and the absence of alternative benefits since the withdrawal of the Service Export Incentive Scheme (SEIS) have made it difficult.
With high Goods and Services Tax (GST) rates of 20-23% and neighbouring countries charging only 6-8%, it is crucial to holistically address these issues to attract tourists.
Mr. Mehra also stated that the increase in the Tax Collection at Source (TCS) rate from 5% to 20% starting July 1, 2023, is causing losses to outbound tour operators in India.
The letter highlights that the tourism sector is crucial for employment generation and economic growth in the country.
The Indian Association of Tour Operators (IATO) has urged the government to lower the TCS rate back to 5% or lower.
Thus, this will provide support to the struggling tourism sector.
The letter emphasizes that supporting the industry has a positive multiplier impact on the overall economy and will make up for any potential revenue loss.
Moreover, If you want any other guidance relating to GST, TDS or Tourism Industry, please feel free to talk to our business advisors at 8881-069-069.
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