NEW DELHI: The Federation of Associations in Indian Tourism and Hospitality of FAITH has approached the finance ministry on the matter of increasing service tax levies on outbound tour operators from India to an effective 9% from 22 January.
FAITH stated Indian tour operators who sell 'internationally based', accommodation and travel bookings and packages do not get any input tax credits for CENVAT from them. Thus a 9% levy (post 40% abatement on service tax) will immediately pass through their bookings to travellers and will make travel booked out of India, by Indian 'tours & travel' businesses immensely uncompetitive.
FAITH has highlighted that in their GST representation dated 4th November, and in their earlier meetings with service tax officials, they had mentioned that the 'place of provision' of service, for outbound is not in India and hence, for Indian tour operators 'booking travel from India' the 'place of provision', clause for service taxes should ideally not apply.
FAITH said an increase of 500%, from 1.5% to 9% on international hotel bookings will have massive disruptive implications and will impact the holiday booking season for April end onwards which starts between 3-6 months in advance. If this is immediately not addressed, travellers from India will resort to booking with 'international tour operators and online travel agents based outside of India, which do not have such tax levies in their jurisdictions.
FAITH has requested ministry of finance to consider the matter for corrective action and has also brought it to the notice of tourism minister, tourism secretary and commerce secretary for their intervention.
Source: economictimes.indiatimes.com