Budget 2024: Infrastructure Initiatives Lauded by Tourism Industry, Tax Issues Remain Unresolved

Focusing on spiritual tourism, Finance Minister Nirmala Sitharaman laid out a robust plan for India’s travel and tourism sector; aiming at transforming many well-known domestic destinations into buzzing tourist attractions in the Union Budget 2024 presented on July 23, 2024.

Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays and TCI), says “This year’s Union Budget has opened new doors to development, specifically for domestic and inbound tourism. With the focus on special development funds/ programs for the socio-cultural-religious potential of iconic temple corridors including Gaya’s Vishnupad and Mahabodhi temples into world-class pilgrim and tourist destinations (to be modelled on the success of the Kashi Vishwanath temple corridor), the Government of India’s intent is encouraging. Additionally, the comprehensive development of the Rajgir Jain Temple site; rejuvenation of the historical gem of Nalanda and Nalanda University into a major religious-tourist centre, would have a multi-pronged impact.

Better Economic Opportunities

While positioning India as a vibrant global tourism destination, it will also accelerate job creation and economic opportunities for allied sectors.The Budget also appreciated the underleveraged potential of Odisha's tourism industry by supporting the state’s rich heritage-history, spirituality, craftsmanship and natural beauty.Recognizing the high potential domestic cruise segment, the Union Budget announcement proposed a simpler tax regime to support/incentivize foreign cruise companies operating in India’s waters.

We’re optimistic about the significant allocation of INR 11.11 lakh crore (constituting 3.4% of India's GDP) towards infrastructure development. The development of road, rail, air, and waterways will ensure a boost to access/connectivity and affordability, and force multiplier benefits for tourism and allied sectors.

When introduced, TCS was considered disadvantageous to salaried employees as their cash flows were negatively impacted. Post the Budget announcement, salaried employees can now avail of immediate credit of TCS paid on account of their foreign travel - against TDS on salary, enhancing the purchasing power of Indian consumers.

Infrastructure Development

Rajesh Magow, Co-founder and Group CEO, MakeMyTrip adds, “The government's continued emphasis on infrastructure development is commendable. Enhanced road infrastructure will bolster the travel and tourism sector. We also welcome the initiatives to develop iconic spiritual and cultural sites into world class tourist hotspots.

The decision to reduce the TDS rate on e-commerce operators to 0.1% is a welcome move. Furthermore, the provision of credit for TCS against income tax under 'Income from Salaries' is logical and will provide much desired relief to taxpayers who travel internationally.” 

Tax Issues Persist

However, a few major pain points remain and the industry members feel that they should have addressed in this Union Budget. Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays and TCI) notes, “The discontinued SEIS scheme should have been reinstated, as this is meaningful towards encouraging inbound tourism, foreign exchange receipts and a force multiplier for employment generation.Also, we are disappointed to note that key pillars in India’s Tourism agenda - Aviation & Hospitality were not mentioned as part of the Budget and both standardisation of GST rates on hotel tariffs to 12% and the reduction of ATF remained unaddressed.”