Hotel Industry Hopes For Tangible Resolutions In FY 2016 – 17
Mumbai: Ahead of the Budget, the Federation of Hotel and Restaurant
Associations of India (FHRAI) has appealed to the government to rationalize taxes
and amend certain policies for aligning the tourism sector with the rest of the
world and give boost to the hospitality industry. In the pre-budget memorandum
submitted to the Ministry of Tourism (MOT) and Ministry of Finance (MoF), the
association has outlined in details the critical taxations and policy
initiatives and recommendations that would provide the hotel industry the much
needed stimulus.
Some of the key recommendations on
taxation include the impact of GST on Tourism Arrivals, availing of Export
Promotion Capital Goods Scheme (EPCG) and Service Exports from India Scheme (SEIS) without a Classification
mandate, Issuance of Tax-free ‘Hospitality Infrastructure Bonds’.
"The hospitality industry has
been at the receiving end for last few years but with the Government’s focus on
tourism development things may be turning around for hospitality too. High
decibel events and initiatives organised by respective States for promoting tourism
and hospitality are indicators of commitment towards these sectors and we feel
positive about the future. However, besides campaigns and promotions, the
ministries will also have to revisit and remodel some of the prevailing tax
structures, laws and policies to bring it at par with competing tourism
economies of the world,” says Mr. Bharat Malkani, President, FHRAI & Hotel
and Restaurant Association of Western India (HRAWI).
“For instance, our neighbouring
south-east Asian countries like Thailand and Malaysia have a GST of 7 and 6 per
cent respectively. In contrast, GST applicable for hotels in India amounts to a
whopping 25 to 30 per cent. Our industry is competing with a difference of
roughly 20 per cent while matching with all global the service amenities and requirements.
Also, we hope that the government considers granting infrastructure status to
hotels with a project cost of INR 25 crore as against the present INR 250 crore,”
he adds.
On policy initiatives, FHRAI has suggested increasing the threshold
limit of INR 25,000 to INR 1,00,000 for payments to hotels and restaurants
against bills raised and to allow bank loans up to INR 10 crores per unit or
borrower extended to hotels and restaurants and be reckoned as 'priority sector
lending' within the RBI guidelines.
"Small and Medium Enterprises (SMEs)
are a vital catalyst for employment generation, skill development and
innovation in the hospitality sector. It is imperative to facilitate timely and
adequate flow of credit for their sustainable growth and expansion. For the
purpose of inclusion under the priority lending norms, the categorization of
SMEs in the hospitality industry should be delinked from the restrictive
criteria stipulated by the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 and instead be based on liberal, industry specific and
globally accepted parameters such as number of employees, annual turnover and
such quantifiable parameters. A broad spectrum of institutional mechanisms
should be made accessible by which the hospitality industry, including our
small and medium enterprises, can access lower cost long-term finance,”
concludes Mr. Kamlesh Barot, past-President, FHRAI & HRAWI.
