In a pivotal move anticipating the forthcoming Lok Sabha Elections, Finance Minister Nirmala Sitharaman is gearing up to present the Interim Budget 2024 for the fiscal year 2024-2025 on 1 February 2024. The spotlight remains firmly fixed on fiscal consolidation and nominal economic growth projections, ushering in a budget that seems poised for stability rather than groundbreaking policy shifts.
Given the impending election fervour, Sitharaman’s choice of an Interim Budget 2024 or Vote on Account in February aligns with the electoral timeline. The full Budget, with its comprehensive policy outlines, is anticipated only after the establishment of the new government, expected in July this year.
The finance minister’s assertion that it will be a ‘vote of account’ hints at a restrained budget, with no major policy revelations. The unveiling aligns strategically, considering the Model Code of Conduct (MCC) typically kicks in mid-March, preventing the government from making any substantial policy decisions post the announcement of election dates.
This year’s pre-election Interim Budget emerges against a backdrop of economic stability. Analysts highlight the easing financial conditions and robust macroeconomic data, despite economic headwinds such as global deceleration, pressures in the agriculture sector, and strains on the rural economy, as noted by analytics firm CareEdge.
Zooming in on sector-specific expectations, the travel and tourism industry takes centre stage, being a vital economic driver contributing 5.8% to India’s GDP in 2022. With the government aiming for a $1 trillion milestone by 2047, this sector holds the potential to act as a formidable force multiplier across allied sectors, employment generation, and foreign exchange receipts.
Expert Voices on Travel and Tourism Expectations:
Madhavan Menon, Executive Chairman of Thomas Cook India Ltd, advocates for reduced income tax levels to boost disposable income, catalysing travel and tourism spending. He also suggests an annual leave travel allowance (LTA) exemption to stimulate domestic tourism.
Vishal Suri, Managing Director of SOTC Travel, emphasises the need to standardise the tax collected at source (TCS) on foreign travel packages, proposing a single five per cent slab to level the playing field internationally. Clarity on TCS for forex card payments is deemed essential.
Key Recommendations for Travel and Tourism in Interim Budget 2024:
GST Input Credit Facility: Experts call for the initiation of GST input credit facilities for inbound and domestic tourism, streamlining compliance issues and audits.
Removal of TDS on Automated Bookings: The industry urges the removal of tax deducted at source (TDS) on automated bookings to align with the government’s digital adoption goals.
Additional Focus Areas for Strengthening India’s Tourism:
- Infrastructural Development: Prioritise setting up new airports through private participation, expand rail, road, and waterways, and focus on religious circuits and underleveraged destinations like Lakshadweep
- Inbound Tourism Revival: Industry experts suggest the revival of the Inbound incentive scheme, tailored for select destinations, to invigorate tourism during peak, shoulder, and low seasons.
As the nation eagerly awaits the unveiling of the Interim Budget, the travel and tourism industry remains optimistic that the government’s fiscal policies will propel India towards becoming the ultimate destination of choice.
As the Interim Budget 2024 unfolds, Vakilsearch’s Tax experts shed light on the critical need for legal clarity amid anticipated tax reforms. Emphasising the intricacies of compliance efficiency, they stress that a nuanced legal approach is pivotal, especially for the dynamic travel and tourism sector. In a landscape where fiscal policies can significantly impact businesses, Vakilsearch experts advocate for proactive legal measures to navigate these changes seamlessly, safeguarding the industry from unforeseen legal challenges.
Our seasoned legal experts bring a comprehensive understanding of the legal intricacies, ensuring your business stays compliant and resilient. By choosing Vakilsearch, you are not just getting legal support; you are gaining a partner committed to easing your journey to success in the face of changing fiscal landscapes. Navigate confidently with Vakilsearch, where expertise meets excellence.
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