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Saturday, 28 February, 2015, 13 : 30 PM [IST]

Union Budget 2015-16: GST to be implemented from April 1, 2016

Presenting the Union Budget 2015-16 today, Arun Jaitley, Minister for Finance, Corporate Affairs, and Information and Broadcasting, Government of India, said that India has now embarked on the game of changing reforms such as Goods and Services Tax (GST) to implement direct transfer of benefits. He added that GST will be put in place with a state-of-the art Indirect Tax system by April 1, 2016.

Subhash Goyal, President, Indian Association of Tour Operators (IATO), expressed his displeasure on the tourism industry not being given any relief in spite of the fact that tourism is one of the largest foreign exchange earnings and employment generating industries. "We have been pleading with the government that tourism service export be treated at par with physical exports and tourism be extended all benefits that are being given to the physical exporters including exemption of Service Tax based on their foreign exchange earnings. Instead of doing so, government has put additional burden by increasing service tax rate from 12.36 per cent to 14 per cent, which will make our packages costlier." He said that he has urged the government to reconsider this so that tourism to India could flourish and the target of 15 million of tourists in the next three to five years could be achieved and more employment can be created through tourism.

However, Goyal said, "We looked at the government to put forth a definitive time line for a nationwide rollout of GST. The tax regime should help us set off Service Tax giving a significant boost to tourism Industry and we are happy that GST will be introduced by April next year."

Pradip Lulla, National General Secretary, TAFI, said that the increase in Service Tax to 14 per cent will be a major roadblock for travel agents working on marginal profits. This will certainly increase the cost of travel for travellers. "Moreover, airlines are paying commission to us on basic fare and not fuel surcharge, but the government will taxing us, combining the both. Hence, we will soon voice our opinions on this matter," he stated.

Sajid Khan, Country Manager – India, South African Airways However, inclusion of entertainment facilities like amusement arcades, theme parks, water parks, concerts etc., in the negative list for Service Tax restricts such establishments from fully reaping the benefits of the growth in tourism. Additionally, proposed changes to increase Service Tax rate plus Education Cess and Secondary and Higher Education Cess to 14 per cent will lead to a hike in air ticket prices.”

Gaurav Goenka, MD, Mirah Hospitality, stated, “The budget overall has been very positive keeping the growth of the Nation in mind. The only deterrent according to me is the increase in Service Tax to 14 per cent. The Service Tax was already quite high and with it being revised upwards it's going to be detrimental to the growth of the hospitality industry. Consumers will have to spend more on other services, which is going to reduce their spend on eating out."

Vijay Kalantri, Vice Chairman, World Trade Center Mumbai, said that the implementation of GST by April 2016 will put in place a state-of-the-art taxation system, and will play a transformative role for the economy.

Guldeep Singh Sahni, President, Outbound Tour Operators Association of India (OTOAI), expressed disappointment that nothing had been announced for tour operators. "Instead the service tax has been raised to 14 per cent which will eventually make the tour packages and air travel more expensive. This would be a big deterrent to the tourism industry and we don’t see any special incentive being endowed to our sector," he stated. But, he welcomed the government’s decision to extend the TVoA facility to 150 countries. "Inbound Tourism to India is sure to see a good increase and moreover, it will enable other countries to think and implement flexible visa norms. Besides the focus on ‘Make in India’ drive would enhance the trade relations between India and the other countries, thereby opening doors for growth in tourism. No doubt, it is a futuristic move for long-term," Sahni said.

Jyoti Kapur, President, Association of Domestic Tour Operators of India (ADTOI), "As a matter of fact, it is not as tourism-friendly, as the service tax has been raised from 12.36 per cent to 14 per cent. This will ultimately increase the cost of tour packages and air and rail travel. On the other hand, good emphasis is being laid on to improve the existing infrastructure and focus on the upkeep of monuments by proposing the development of heritage sites. Expanding the TVoA to 150 countries in stages will increase foreign tourist footfall in the country. This looks promising and we hope things would be even better in the coming future."
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