Union Budget 2014: Will service tax exemption boost Tourism sector?

The tourism industry has been complaining about not being treated equal to exporters based on its foreign exchange earnings. They are usually debarred from the benefits exporters of the goods receive inspite of receiving foreign exchanges. Tourism has been adversely affected and the industry is hoping the government will address their concern in the Union Budget 2014.

Here are some of the expectations that the tourism department has from the new government’s Budget 2014.

Exempt Service Tax

Tour operators are expecting exemption of service tax on tour packages in Budget 2014. The tour operators in India are waiting for a cut on tax which they don’t usually as they receive although their payments are made in foreign exchange. Due to the service tax which has now been added, Indian packages are losing on account of competitiveness in the sector. Countries which are competing with India like China, Thailand, Sri Lanka, Singapore offer competitive prices which Indian packages fails to offer.

Stop discrimination

The Indian tourism industry is usually discriminated from tourism department of other countries.  Although tourism industry earns in foreign exchange, the benefits that the exporters of goods receive are not provided to the exporters of tourism industry.

Discontinue service tax on same transaction

In the tourism industry in our country, a tour operator has many sub-contracts who manage various tours under him for the ease of working. So, eventually two operators pay the same tax as they are not allowed the CENVAT Credit. At times, there are many operators handling the same tours making them pay the same tax multiple taxes. This leads to major loses. These cases at times are more than 12.36%.

Abolish fuel surcharge

The high rising fuel prices has been having a cascading effect for the budget carrier passengers. The reintroduction of fuel surcharge has been costing a lot for domestic and international routes. Cutting of those charges would help cut the cost in travelling which would boost the air travelling.