Focus on Tax Breaks Will Result in Increased Disposable Income Making Opportunity for Travel Industry: Union Budget 2019

WHEN THE interim Finance Minister, Piyush Goyal, announced the Union Budget 2019, it brought in some relief to the middle class and small farmers. Major changes were done in the income tax rules for the year 2019-20. However, nothing specific was announced for the travel and tourism sector, the industry feels that the exemption of tax from income up to Rs 5 lakh per year will increase the spending capacity. People will tend to spend more on their travel which has a direct effect on the hospitality and tourism sector. BW Hotelier gathered few reactions from the industry to know how they feel about the Budget 2019-20.

Rahul Singh, President, National Restaurant Association of India (NRAI)

Much needed doles provided in the budget is surely a positive sign for the restaurant sector as it will drive consumption. However, the fundamental philosophy of GST remains lost in the regime which negates Input Tax Credit (ITC) on the premise of a lower output tax rate.

GST regime was brought in to achieve transparent transactions and ensure full compliance. But the removal of ITC for the restaurant sector has brought in bad practices and unregulated transactions. Discriminatory removal of ITC has taken away the “vatability” of GST, passing on the burden of cascading tax to the consumers; thereby striking at the very root of the regime.

Single window clearance for the Indian cinema sector has manifested ease of doing business. Still, restaurants have been awaiting relief from the 15 odd licenses needed to serve a sandwich. Hope the government takes note that we are an industry worth Rs 3,52,000 crore, expected to grow to Rs 5,52,000 crore by 2022. For an industry of this size generating over 6 million jobs, the government must recognize the increasing contribution by the introduction of a uniform policy that includes single window clearance and reduction in no. of licenses for operating a restaurant.

Mahesh Iyer, ED and CEO, Thomas Cook (India) Limited

While the Interim Union Budget 2019 has seen no direct mention of the travel and tourism sector, focus on tax breaks for the Middle Class (including doubling of income-tax exemption to Rs 5 Lakhs, raising of the threshold on bank fixed deposit interest to Rs 40, 000, etc.), will result in increased disposable income and a cascading boost to consumption- offering the sector an opportunity for increased travel & tourism spends.

Impetus to associated industries including the Indian Railways with a budget outlay of Rs. 1, 48, 650 cr., a specific focus on untapped sister states Meghalaya and Tripura, along with 19,000 cr. allocation to roadways under PMGSY (Pradhan Mantri Gram Sadak Yojna) will see enhanced access and connectivity bringing newer tourism destinations on the radar, especially in Tier II and III regions.

Sarbendra Sarkar, Managing Director, Cygnett Hotels and Resorts.

It is a landmark budget by the Central Government. As we can see that there is a tax rebate for the middle-income group, whereby the disposable income will increase and the common man will get to spend with ease. The exciting initiative to connect the rural areas by rails and roads will act as a catalyst in increasing the potential of the last mile. Also, the startup and digital India schemes will help in empowering the young creative minds. All of those described above will boost the tourism industry. 

Ritesh Agarwal, Founder & Group CEO, OYO Hotels & Homes

This Budget makes a strong promise to the people to India, which I hope will be backed by an equally strong delivery, especially in the areas of job creation and addressing the skill-talent gap. The announced tax breaks, together with low average inflation, are likely to spur domestic demand and spending, and inject liquidity in the market. This is great news for sectors such as hospitality and travel. The announcements on bridging the digital divide and improving efficiency through technology are also welcome. I am excited about India’s Vision 2030 and believe that it will empower more young entrepreneurs to set off on their entrepreneurial journeys.

Aloke Bajpai, CEO & co-founder, ixigo

Tax breaks for the middle class will result in increased disposable income triggering an increase in travel and tourism spends. The proposed Rs.1448 crore for tourism infrastructure development will propel India's growth impetus as the fastest growing travel market in the world. Allocation of these funds towards the improvement of railway networks, roads and tourist destinations will help increase the economy driven by tourism.However, the budget should have also addressed stronger short term initiatives to tackle the increasing air pollution problem faced by the national capital, which has had a drastic negative effect on foreign tourist inflow last year.