Professional Documents
Culture Documents
Taxation in India
Taxation
Travel and tourism in India is a high-taxed industry, which makes India
expensive as a tourist destination.
This is affecting the growth of the industry in India and India is losing
out to other low-cost destinations.
Inbound tourism is the one most affected. Various taxes are levied
across the entire industry right from tour operators, transporters, airline
industry to hotels and these include service tax, luxury tax, tax on
transportation, tax on aviation turbine fuel (airline industry), and various
taxes on transportation.
In addition, these tax rates tend to vary across different states in the
country.
TAX REFORMS : END DISCRIMINATION
The biggest impediment has been the tax structure on tourism, both
at the central and state level so much so we have the dubious
distinction having the heaviest taxation on tourists at-least in two cities
in Mumbai and Delhi.
Besides, the tour operators who earn foreign exchange like any
exporters suffer from gross discrimination.
While exporters are allowed 100 per cent deduction on their turnover
under 80 hhc of the income tax act, the tourism sector with far less
outgo of earnings has to be treated at par with exporters.
Tourism industry Must be allowed all the benefits available to
exporters & software engineers.
The same envisage certain benefits such as 10 years tax holiday, duty
free import, import of restricted items etc.
IATO urges that income tax should be amended in line with revised
exim policy to enable service providers to avail the tax benefit Income
from foreign travel groups received as short term advance again attract
a discriminatory provision.
The differing rates of road taxes and collection systems hurt free inter-
state movement.
THE LUXURY TAX
Luxury Tax is a tax that is levied by most of the state governments
(not all) to fill their coffers at the expense of tourists. And the funniest
part is, it’s levied on the official tariff of the room where you had put up.
Consider that you are on a holiday, say at Ooty and the Hotelwallahs
happily gave you a discount of 20 % on the rack rate. The rack rate is the
one that is mentioned on the reception. Supposing accommodation you
chose was for Rs 1500 and the reception lady smilingly gave you the
room for 1200, a 20% discount as it was off-season. You felt on top but
just to find that on the bill a 14% luxury tax has been levied and that too
upon the rack rate which in this example was Rs 1500.
The highly varying rates of luxury tax, which ranges from 5 per cent
in Uttar Pradesh to 20 per cent in Tamil Nadu are an anomaly that needs
to be replaced by a rationalized tax structure.
Luxury Tax not only irks the ordinary travelers but is adding to the
woes of hoteliers and the travel agents. Hit by recession and terror the
hospitality industry is facing a lull, luxury tax is not making it any easier.
In the Union Budget 2011-12, the government has announced a 10%
service tax on hotel accommodation in excess of Rs 1,000 per day and
on service provided by air-conditioned restaurants that have licence to
serve liquor.
Air transportation has a symbiotic linkage with tourism. And for that
reason, it would have been better if both were placed under one
Ministry. It will also be in the greater interest of tourism, that there
should be stable air schedules for services for linking tourist
destinations.
• another key segment of the sector . and also subject the tourists to
avoidable harassment because the vehicle needs to stop at each state
border to pay the taxes.
• Tourist Trade Associations estimate that all these factors make India
more expensive by 25 per cent to 30 per cent as compared with other
tourist destinations in the region.
Travel agents take up air fare tax issue
with Finance Minister
• Travel Agents Association of India (TAAI) seems to be
aggressively pursuing the issue of double taxation being levied
by the Government on air ticketing.
•The top tour operators such as, Thomas Cook, Cox & Kings, Kuoni
Group, Raj Travels comprise 20% of the industry. While there are a large
number of small travel agents across the country. Other associations are
also supporting TAAI. There are only about 80-85 odd airlines in the
country and about 2,600 IATA agents, over 35,000 non-IATA agents who
all pay service tax and file returns. Service tax should be levied and
collected at the airline or the hotel level.
Thank You
Presented by :-
Vikash
Vikram Katoch
Vikramjit Singh
Visharad Saxena
Vivek Kumar Vinod Bhai Chaklasia
Yatinder Pal