Former IATO Sr. Vice President and an industry stalwart, Travelite India’s Sarab Jit Singh insists that there is an urgent need for the government to take a decision on SEIS (Services Exports from India Scheme) incentives rate for tour operators to help revive India’s inbound tourism fortune. Besides, there is call to revise the incentive rate to
10 per cent from the previous 7 per cent in order to lend more teeth to the industry’s effort in promoting tourism.
The SEIS incentives comes in the purview of Directorate General of Foreign Trade (DGFT), under Ministry of Commerce and Industry, Government of India. Under this scheme for services sector any tourism related company, from tour operators to hotels, can claim incentives on the ‘net foreign exchange’ earned.
According to Singh tour operators were offered incentive of 7 per cent for previous fiscal 2018-2019 andthe same has been extended (New, Foreign Trade Policy is expected soon) for another year (2019-2020 fiscal), however, the incentive rate for the year is yet to be decided by the government.
India’s destination attractiveness for foreign tourist vis-à-vis taxes has always been a topic of debate. It’s a widespread belief that, earlier, the multiplication of taxes, and now GST rate of 18 per cent on tourism services, has hampered the growth of inbound tourism in India. City-states like Singapore and Hong Kong receive much more international tourists than India! Countries like Malaysia and Thailand attract more tourists helped in part by little or no tax and competitive pricing in the international market.
“The 18 per cent GST on tourism, all services included, makes India highly uncompetitive as an inbound destination. This is where SEIS, a kind of tax drawback, has provided much succour to India tourism and the industry during the last few years. The Indian tour operators have passed on this incentive benefit to tourists through their foreign operators in order to make Indian tourism products competitive enough in the international market to take on other tourism destinations, whooffer less expensive packages,” Singh informed.
Furthermore, Singh insists that the SEIS incentives that was calculated at 7 per cent needs to be revised to 10 per cent in view of the devastating effects of pandemic and embolden the trade into undertaking destination marketing with renewed vigour as well as provide relief.
“As any other business, tour operators are also facing financial difficulties due to pandemic, therefore, it will be far more prudent for Govt. to enhance the incentive rate to 10 per cent under SEIS for the year 2019-20. The benefits to the national economy will be far-reaching. It will help tour operators spearhead government’s efforts in positioning and marketing India all over the world as a safe and ready tourism destination in the post-Covid world. SEIS incentives at 10 per cent will be the much needed shot in the arm,” he stressed.
“If it is given now, the SEIS incentive comes at a time when the industry is demanding bailouts to help sail through the devastating effects of the pandemic that has killed off India’s tourism, and also with it, the livelihoods of millions,” he said.
“So not only it will help in critical sustenance for the tour operators and save great many businesses and jobs but will also help tour operators from across the country to go out and start their destination marketing activities in the international tourism markets and help India come out stronger from the crippling effects of the Coronavirus pandemic sooner than later. Besides, it will not only help in upgrading our services and offerings, like buying new vehicles etc., but also trigger economic activities and new hiring,” Singh further added.
Service Export from India Scheme is reward-based initiative from the government, which aims to elevate the export of certain notified services and eventually boost the economy. Under the scheme, a service provider of the notified services, located in India, can claim additional benefits (Duty Credit Scrip) for their transaction on an international market, while still enjoying the perks as provided under GST regime.
