Budget 2021: COVID-19 hit hospitality sector seeks relief on GST front, demands industry status

Finance Minister Nirmala Sitharaman is scheduled to present the Budget 2021 in Lok Sabha at 11 AM. At this crucial juncture Sitharaman`s announcement for the hospitality industry in the Union Budget 2021, is going to have a major impact on lakhs of people dependent on the sector.

New Delhi: Several sectors in the country are battling a huge crisis in the aftermath of the COVID-19 pandemic – one such sector being the hospitality sector. The industry in general is witnessing a massive distress due to low or no footfalls. The sparks of revival are few and far in between. According to one estimate, more than 40% of hotels in India are on the brink of closure.

At this crucial juncture, Finance Minister Nirmala Sitharaman's announcement for the hospitality industry in the Union Budget 2021, is going to have a major impact on lakhs of people dependent on the sector.

Anirban Chakraborty, Managing Director & CEO, TFCI Ltd said that the travel and tourism sector has been one of the most impacted sectors during the course of the pandemic. Few sector specific sops may be considered by the government to help hospitality sector emerge out of this situation.

"Steps like reduction in GST slabs, waiver/normalization of various license fees, sector specific stimulus package (viz., interest support by government, additional funding by lenders, etc.) may be considered. Government should continue to encourage domestic tourism by extending and increasing the threshold LTA benefits for expenses incurred for domestic travels/stays. Tax exemption on MICE events; enhancing liquidity support by promoting hospitality focused AIFs with benefits like tax holidays, etc,” he added.

Anirudh Lakhotia, Director- The Golden Tusk told Zee Media, "Progressive push from the government to this sector is the need of the hour to keep the Hospitality, its allied businesses such as travel companies and its workforce afloat".

Most importantly, rendering the ‘industry’ status to sector will give a strong push to the sector allowing it to enjoy all the benefits which are issued to the manufacturing industry, in terms of subsidies, credit facilities, power rates etc, he said.

Lakhotia also highlighted the need for revision in GST structure for the hotel industry, keeping in mind the revival of inbound travel in the Budget 2021.

"For hotels having tariff of over Rs 7,500, if the GST on both- Room & Food is lowered to 12 percent than the current structure of 18 percent, it will put the Indian tax structure at par with other south-east Asian countries & make such hotels more affordable for domestic traveler as well," he added.

Further, if the tax structures are revised to increase disposable income of tax payers, it will boost the spending on non-essentials, travel & tourism being one of them. With inbound tourism still some time away to fully ease out, domestic tourism will definitely witness an increase in tourist inflow with increased disposable income, he said.

#mute

Finance Minister Nirmala Sitharaman is scheduled to present the Budget 2021 in Lok Sabha at 11 AM. Union Budget 2021 will go paperless as the Finance Ministry has decided not to print the budget documents amid the COVID-19 pandemic. Touted to be a historic move, it will be for the first time in the history of independent India that the budget 2021 papers will not be printed.