India's Union Budget Wish-List: Visa-Waivers and Tax Breaks

25.01.2024 - 06:49 / skift.com / Thomas Cook / Peden Doma Bhutia

In the fiscal year 2023-24 budget, the Indian government showed its recognition of the immense potential of the travel and tourism sector by allocating INR 24 billion ($290 million).

The tourism sector is expected to contribute approximately 7% to India’s economy, reaching INR 37 trillion ($450 billion) and employing 58 million individuals by 2033, according to the World Travel and Tourism Council (WTTC).

The interim Union Budget for 2024-25 is scheduled for February 1. Here’s what the tourism industry is watching for:

The Visa Power: A key demand on the wishlist is the implementation of visa-free arrival for travelers from India’s top source markets. Drawing inspiration from Asian neighbors like Malaysia, Thailand, and Sri Lanka, which already offer visa-free entry to Indian tourists, this measure is seen as a way to boost foreign tourist arrivals.

MakeMyTrip’s Co-Founder and Group CEO, Rajesh Magow, emphasized that this step would not only enhance India’s competitiveness in the global tourism market but also foster a reciprocal environment.

The call for simplifying the visa process or offering visa-free arrival was echoed by the spokesperson of Radisson Hotel Group.

Spend on Marketing: There’s also the demand for marketing grants to position India as a go-to destination on the global map. Mehul Sharma, founder and CEO of Signum Hotels & Resorts, said, “Even the most exotic destinations need a good PR strategy.”

The Tax Issue: A crucial plea from various travel players, including MakeMyTrip, SOTC Travel, Thomas Cook India, and EaseMyTrip, is to address the recently-implemented travel tax issue. They argue that this disparity provides an unfair advantage to foreign-based entities.

Why The New Tax Is Unfair? Online travel companies operating in India are mandated to collect 20% tax for spends above INR 700,000 by an individual in a financial year on overseas travel including tour packages. In contrast, foreign-based companies do not collect the tax, allowing them to offer lower costs to Indian citizens.  

The Solution: The proposal includes streamlining the Tax Collected at Source (TCS) rate on outbound tours. Standardise the TCS rate on outbound tours into a single 5% slab to reduce the significant advantage enjoyed by international competitors, said Vishal Suri, managing director of SOTC Travel.

The streamlining of the TCS structure to a more favorable 5% slab was also highlighted by Nishant Pittie, CEO and co-founder of EaseMyTrip.

Domestic Competition for OTAs: Further demands encompass removing disparities between ecommerce operators and suppliers in the domestic market, specifically regarding taxation on non-AC bus bookings through ecommerce platforms.

Currently, a customer pays 5% tax charge