Tour operators seek more sops from FM to revive the ailing sector

 



Indian Association of Tour Operators (IATO), which represents more than 1,600 operators for inbound tourists, met finance minister Nirmala Sitharaman to discuss key measures that could set the tourism industry on the path of revival.

A delegation of IATO representatives led by current president Rajiv Mehra and former president Pronab Sarkar thanked the FM for clearing SEIS (service export from India scheme) for the service providers and recent measures such as 500,000 free e-Tourist Visas for foreign tourists and granting of loan on government guarantee to small tour operators. However, the delegation put forward several pending issues, which if resolved can lead to revival of tourism in the country.

The delegation requested not just to retain SEIS Scrips' percentage of 7% which is being given to the tour operators for the last couple of years but raise it to 10%. If SEIS cannot be increased, it should be retained at 7% without consideration of capping of the turnover of the tour operator, they said. Under the SEIS Scheme, the government provides incentives to all service providers who are providing services from India to organizations outside the country.

The IATO delegation also discussed the cascading effect of multiple GST on the tour operators and requested to remove this anomaly by charging GST on the deemed total value which could be 10% of gross billing of the tour operators. This will allow the service to be taxed at 18% on 10% mark-up (their fee), which means effective rate of GST on the total package cost will work out to 1.8% of gross billing of the tour operator to the client with no Input Tax Credit.

It was also requested that GST/IGST be fully exempted on the services provided outside India, i.e. in neighbouring countries even if the package includes India tour as this is causing loss of business for the tour operators. As a result of tax exemption, bookings will come to Indian tour operators instead of such bookings going to tour operators based in neighbouring countries. This will add considerable foreign exchange for the country.

Another issue that was taken up was levy of Tax Collection at Source (TCS) on sale of overseas tour package and it was requested that TCS should not be made applicable to persons / companies who are non-resident foreign citizens/tourists/foreign tour operators located outside India for purchasing tour packages through an Indian tour operators for outside India specified clearly.

Further, the matter of loan under ECLGS was raised, requesting amending the guidelines issued by National Credit Guarantee Trustee Company Ltd (NCGTC) as banks are not entertaining applications of tour operators for availing the ECLGS scheme benefit. It was given to understand that revised guidelines are going to be issued to the banks.

The industry association also requested the finance minister to consider their long pending demand to treat tourism industry as deemed exporter at par with IT Industry under Export of Services based on their foreign exchange earnings by relaxing the parameters/definition of export of service and by changing the criteria of place of supply.

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