Home / News / India /  Blow to travel sector as govt redirects LTC funds: tourism body

NEW DELHI: The Federation of Associations in Indian Tourism & Hospitality (FAITH), representing the tourism, travel and hospitality industry of India, on Monday expressed disappointment over the government's decision to redirect LTC funds of government employees to buy consumer goods and services taxed at 12% and above.

The tourism body said the decision, announced by finance minister Nirmala Sitharaman, will act as a deterrent for tourism sector which was pinning its hope on the revival of business during the festival season when people look to travel to their home states. After almost eight months of nil to limited tourism activity, the festival season was expected to be one of the few demand drivers. The industry was hoping for more tax-based stimulus in the hands of all citizens to travel when spent against GST rated travel agents, hotels tour operators, tourist transporters & restaurants.

"Instead redirecting the LTC money of government employees to buy consumer goods would dry up those funds for the travel sector. Additionally, it would also send a vote of no confidence to the tourism travel & hospitality industry which was looking to get back on its feet after ‘Unlock'," stated a statement from the body.

Since this is a four-year block scheme it will also cut away funds for future travel demand source for the next year.

"It is requested that not only the LTC funds be restored but also an income tax benefit be introduced for all citizens to get income tax exemption while travelling within India upto 1.5 lakhs against GST registered travel agents, hotels tour operators, tourist transporters & restaurants," FAITH suggested.

It also said, the way states are being extended tax-free funds payable over 50-years, the tourism industry also be given similar tax-free funds on a direct benefit transfer for salaries and operating costs payable over 10-years post covid-19 pandemic.

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