HAI's expectations from Union Budget 2024-25

Charulata Sukhija Jul 20, 2024

Tourism has never received the kind of attention that has been given to the sector in the last decade

The Union Budget is supposed to be a tool of the Central Government to implement its socio-economic policies. The budget affects every sector of the economy as well as every citizen. Though the preparation of the Union Budget is shrouded in secrecy, true to the democratic traditions it is preceded by wide ranging consultations within and outside… always arousing expectations.

As the apex body of the Indian hospitality industry, Hotel Association of India (HAI) is invited for pre-budget meetings by the Finance Ministry and has been participating in the consultations for more than two decades. There is a great sense of pride in being a part of this mammoth exercise and a satisfaction of knowing that the industry issues are being heard.

For the Union Budget 2024-25, as is the practice, suggestions were invited for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes, rationalisation of the rates of tax, reducing compliances, for providing tax certainty and reducing litigations.

HAI presented its recommendations for the organised hotel sector under the heads of direct taxes, policy including foreign trade policy, indirect taxes, customs and excise. Though GST related issues are not examined, the Ministry has been very supportive in hearing the industry’s GST related suggestions and conveying them to the concerned authority.

Tourism has never received the kind of attention that has been given to the sector in the last decade. The Hon’ble Prime Minister himself has been India tourism’s best brand ambassador. Union Budget 2023-24 announced that tourism will be developed in mission mode in the Amrit Kaal of the run-up to the country’s 100 years of independence and of realising its vision of being a developed nation and the third largest economy. Hotels are the essential infrastructure in the development of tourism just like rail, roads, ports etc There can be no tourism without tourist accommodation.

The industry, therefore, has never been more hopeful of seeing transformative policies that can unleash the immense potential of Indian hospitality in its contribution to GDP growth, in generating jobs, in promotion of the SDGs and in developing an inclusive economy. All the suggestions from the industry lead up to its primary plea - of a recognition of the sector’s role in nation building thereby receiving the status given to infrastructure industries and the benefits given to manufacturing and even agriculture sectors. Every hotel room adds two direct jobs and several more indirect ones. Lamentably hotels have been viewed as luxury, elite and have also been bundled under “sin” goods. The industry humbly begs to differ and requests that hotel sector be viewed as a key driver of the nation’s socio-economic policies while considering the industry’s suggestions of grant of infrastructure status, industry benefits, lower taxation (corporate and MAT), better ease of doing business, fewer approvals / licences and NOCs, reward points against foreign exchange earnings, allowing higher rate of depreciation for hotel buildings, incentivising hotels for adopting sustainable practices in their operations among other recommendations submitted to the Ministry.

The budget process and the policies guiding it can be more transparent and available to the Associations for a more effective interaction and for recommendations to be realistic and aligned. We look forward to the pre-budget consultations being given due attention and being escalated to the highest level for appropriate action and not rendered a mere procedural formality.
It is rightly said that actions speak louder than words.