Indian Union Budget Disappoints Tourism Industry... Yet Again

23.07.2024 - 23:38 / skift.com / Rajesh Magow / Nirmala Sitharaman

The travel industry in India had a long wish list for the Union Budget released Tuesday: Industry status for tourism; a uniform tax rate for hotels; streamlined registration for online travel agencies; infrastructure status for hotels.

Instead the industry got a few small offerings: Indian Finance Minister Nirmala Sitharaman said India will develop two temple destinations in Bihar — Vishnupad Temple in Gaya and Mahabodhi Temple in Bodh Gaya. And she said there would be a focus on developing tourism in Odisha. Two tax reform measures were well received.

But despite the focus on making India a global destination, there was no change in the global promotion budget, which had been earlier been reduced by 97% in the interim budget announced in February.

“We expected that the government would reinstate the advertising budget for overseas promotion of inbound tourism. It’s disappointing that this didn’t happen,” said Madhavan Menon, executive chairman of the Thomas Cook (India) Group.

“Our longstanding demand for infrastructure/industry status — a critical stimulus for travel and tourism growth — was also left unrealized,” Menon added. 

Aviation and hospitality received no mention in the budget. “Both standardizing the good and services tax (GST) rate on hotel tariffs to 12% and reducing aviation turbine fuel (ATF) were unaddressed,” Menon said.

Apart from the boost to spiritual tourism, the government also attempted to simplify the taxation levied on cruise businesses.

“The government has also shown interest in simplifying taxation in cruise business by proposing a presumptive taxation for cruise ship operations in India. This initiative aims to encourage foreign cruise owners to operate in India,” said Rikant Pittie, co-founder of EaseMyTrip.

The budget also proposed to reduce the tax deducted at source (TDS) for e-commerce companies from 1% to 0.1%. 

MakeMyTrip Co-Founder Rajesh Magow appreciated the initiative, adding, “The decision to reduce the TDS rate on e-commerce operators to 0.1% is a welcome move. Furthermore, the provision of credit for TCS against income tax under ‘Income from Salaries’ is logical and will provide much desired relief to taxpayers who travel internationally.”

The biggest takeaway from the budget for the tourism industry was the boost to spiritual and religious tourism in Bihar. The Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Bihar will also be developed on the lines of the Kashi Vishwanath Corridor in Varanasi. This would help to facilitate better tourist flow and provide improved amenities and facilities. 

The government’s Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) scheme has led to a remarkable transformation in Varanasi’s tourism