Effect of new cess & taxes still to be worked out. Moving the Model Shops & Establishment bill to state level, the lone silver lining in a one-sided Central budget.
The restaurant, tourism & hotel industries found no mention in the Union budget 2016-17 of Arun Jaitley. The industry was hoping for some key recommendations on lower goods and service tax (GST) for related services, extension of e-tourist visa, promotion of medical tourism and lowering the threshold of infrastructure status threshold for hotel projects to INR 25 crore, none of which did not figure in the budget.
“The Union Budget 2016 was largely agrarian in nature and the restaurant and F&B sector was looking forward to some impetus. While we had also hoped for some announcement on implementation of GST, the industry will be impacted to a limited degree by the increase of service tax, through the introduction of 0.5% agri cess. However, the decision to circulate the Model Shops & Establishments bill to state governments for voluntary adoption is a welcome move and we hope to see some traction on it,” said Riyaaz Amlani, president, NRAI.
Last year, the finance minister increased the allocation for the tourism sector and announced a slew of measures to draw foreign tourists and foreign exchange to the country. Developing infrastructure at certain important heritage sites, improving cleanliness at holy sites and setting up centres for adventure activities were some of the measures.
This year, the industry was keen to see the GST roll out as it is already saddled with multiple layers of tax including VAT, Service Tax, Luxury Tax etc. Currently, Indian hospitality levies taxes in the range of 20% compared to just 2-5% on average across the globe.
Another bright note is the announcement of 1,500 multi-skill training institutes across the country is likely to address the shortage of skilled labour for the industry.
