The Indian travel and tourism industry has expressed its disappointment at the possibility of Leave Travel Concession (LTC) funds of government employees being redirected to buy consumer goods.
The Federation of Associations in Indian Tourism and Hospitality (FAITH), a policy federation of all the national associations representing ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI and TAFI termed the government’s move as a vote of no-confidence for the travel sector.
It instead called for an income tax benefit to be introduced for all citizens to get income tax exemption up to Rs 1 lakh while travelling within India.
FAITH’s reaction came in the wake of Union Finance Minister Nirmala Sitharaman’s announcement of the government’s cash voucher scheme. Under the scheme, in lieu of one LTC during 2018-21, employees will receive cash payment.
LTC Cash Voucher Scheme Explained:
Under this scheme, government employees can opt to receive cash amounting to leave encashment, plus three times ticket fare, to buy items which attract a GST of 12 percent or more. Only digital transactions allowed and a GST invoice has to be produced.
FAITH in a statement said that coming on the back of a prolonged lockdown, the Indian Travel and Tourism industry was looking at festive season holidays boost travel demand when people look to travel to their home state.
Why the travel and tourism industry has a problem:
After almost 8 months of nil to now very limited tourism activity, the festive season was one of the few demand drivers that the Indian tourism travel and hospitality industry was looking forward to.
“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 and in restaurants,” the industry body said.
Instead redirecting the LTC money of government employees to buy consumer goods would dry up those funds for the travel sector, FAITH said adding that additionally, it would also send a vote of no-confidence to the tourism, travel and hospitality industry which was looking to get back on its feet after ‘Unlock.’
“Since this is a 4-year block scheme it will also cut away funds for future travel demand source for the next year when the LTC block ends in 2021. The government’s move thus goes against the spirit of domestic tourism push and year 2021 as domestic tourism year being planned by tourism ministry,” FAITH said.
Restore LTC, provide IT benefits on travel
The industry body 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 and restaurants.
FAITH also said that the way states are being extended tax free funds payable over 50 year, the tourism industry which is the most stressed currently and also the most employee intensive be given similar tax free funds on a direct benefit transfer for salaries and operating costs payable over 10 years post COVID.