Hospitality sector seeks more govt help2 min read . Updated: 01 Jun 2021, 01:02 AM IST
- Under the ECLGS 3.0, hospitality firms can get the benefits, subject to a maximum assistance of 40% of loan outstanding or ₹200 crore, whichever is lower
The hospitality sector, one of the worst-hit by the covid-19 pandemic, is seeking more government assistance to stay afloat. So far, the only respite has been the finance ministry’s decision to extend the Emergency Credit Line Guarantee Scheme (ECLGS) to the sector, under which the ministry recently removed the ceiling of ₹500 crore in loan outstanding as on 29 February 2020 to be eligible to avail credit.
Under the ECLGS 3.0, hospitality firms can get the benefits, subject to a maximum assistance of 40% of loan outstanding or ₹200 crore, whichever is lower. “It’s a timely move but much more needs to be done for the sector," said Patu Keswani, executive committee member and treasurer, Hotel Association of India (HAI), and chairman and managing director, Lemon Tree Hotels.
Earlier, HAI had made representations to the prime minister and finance ministry asking for relief in key areas, such as a one-time settlement of loans and waiver of all statutory liabilities, including property tax, lease rentals, licence fee and excise fee, across central, state and municipal levels during the pandemic. It had also sought a stimulus package for subsidizing salaries of hotel employees.
The hospitality and travel sector’s demand for tax rationalization, was also not considered at the GST Council meeting held on 28 May.
The Federation of Hotel and Restaurant Associations of India (FHRAI) had urged the government to cut GST rate on hotel bookings, and remove GST for paying rent for players who were not eligible to claim input tax credit. It also urged the council to allow hospitality establishments to get refund of unutilized GST credit lying with state governments.
Several representations to the finance ministry and the Reserve Bank of India for policy measures required to help the industry tide over the crisis have so far fallen on deaf ears.
“The GST Council meet had no mention about the precarious situation of the tourism and hospitality sector in the country," said Gurbaxish Singh Kohli, vice-president, FHRAI. “The industry is on thin ice and the government’s continued nonchalance towards it is worrisome. We have our hopes completely pinned on the announcements of stimulus packages from the finance ministry and pray that it does our industry justice."
The hotel industry’s total revenue fell roughly 75% during the last financial year.
The industry had taken a revenue hit of around ₹1.3 trillion during 2020-21.
Indian Association of Tour Operators (IATO), which represents more than 1,600 operators for inbound tourists, said it is crucial to reduce taxes on the tourism industry as it is set to face tough competition from neighbouring countries which will offer best deals to attract international tourists.
The industry association has requested the GST council to consider taxing only the service fee at 10% rather than taxing the whole tour package cost. It has also urged that GST/IGST may be fully exempted on the services provided outside India including neighbouring countries even if the package includes India tour.
“Until and unless we reduce taxes on the tourism products, we will not be able to compete with South Asian and other neighbouring countries as tax on tourism in these countries is very low compared to our country," said Rajiv Mehra, president IATO.
With severe covid 19 wave in India, inbound tourism has remained restricted for the last 14 months with multiple countries imposing travel ban on India.
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