Government may grant infrastruture status to tourism: Stakeholders, however, urge for industry status for the sector

There is an ongoing buzz that the Union government may grant infrastructure status to the tourism industry along with other sectors to make it eligible for attractive tax benefits. It is a well-desired move, aimed to help industries hit hard by the pandemic and boost investments.
Gaining infrastructure status has been a long-standing demand for several sectors, including tourism. Infrastructure status usually comes with several incentives, including cheaper bank loans, tax concessions and a higher capital inflow.

Commenting on the proposed move, Jyoti Mayal, President, TAAI, said, “Travel Tourism & Hospitality has been the most hit in these unprecedented times and continues to be so. The Union government may bring more sectors under the ambit of infrastructure segments would be a much-needed move as it is an undeniable fact that tourism contributes a lot to society and the economy, and it needs a set of proper structures and beneficial policies, resonating with the sectors interests to make it sail through these challenging times.”

Ajay Prakash, President, TAFI, feels that granting infrastructure just may help the industry. “Grant of the infrastructure tag just might help sustain the floundering industry. The infrastructure tag would allow stakeholders to access loans at lower rates for longer periods, pay lower charges for utilities and provide some reduction in taxes, too.,” he said.

 

It is important to mention here that the proposal to accord “infrastructure” status to tourism, along with agriculture, housing, hospitals and hotels was mooted before the presentation of the Union Budget for 2005-06. “It’s ironical that 17 years down the line we are still hoping that tourism might finally get this coveted tag,” quipped Prakash.

Debjit Dutta, Chapter Chairman-IATO, West Bengal, said that granting infrastructure status to the tourism sector will help bring investment.

According to him, once the segment comes under infrastructure tag, it will give tax benefits under section 35 AD. “Some of the tourism sectors which may attract investment if it comes under infrastructure status such as adventure tourism related infrastructure – river cruises, caravans or hot air Ballooning,” he said.

 

However, industry stakeholders are looking for Industry status to the tourism sector rather than infrastructure tag. Said Dutta, “To get the actual benefit, the government must give “industry” status to the tourism. According industry status will be a game changer for the sector.” Similarly, Mayal said that tourism, travel & hospitality of India leverage our national assets. “Centre & states need to be aligned to have a synergistic and a coordinated approach in tourism planning and execution. It is thus vital that tourism, travel & hospitality be put on the concurrent list under the Constitution of India. Once the tourism, travel & hospitality is declared as an industry by the Centre and put on concurrent list it will provide tax benefits and boost investments. It will also incentivise all states to align their policies,” pointed out Mayal.

The NCAER report on the effect of Covid on the tourism industry estimated that a total of 21.5 million jobs were lost in the first three quarters of the year. “But it’s not only the wage earners who suffered, the drop in income for the self-employed or business owners was a staggering 124% in Q1 of 2021. Surely this segment deserves a little hand holding, even if direct governmental support is not forthcoming. But there is hope – Now that the Adani Group has bought into a travel portal, perhaps the tourism industry might actually get the infrastructure tag!,” said Prakash.

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