Budget 2022 expectations: Hotel Industry seeks Infra status, exemption on meeting expenses among other demands from FM Nirmala Sitharaman

Ahead of Union Budget 2022, hotel and hospitality industry wants infrastructure status for the sector, GST credit to individuals for hotel stays, exemption on expenses incurred on meetings/conferences held in hotels among several other demands. Union Finance Minister Nirmala Sitharaman will present Budget 2022-23 on February 1.  

The industry has urged the government to assign infrastructure status to the hospitality industry. Currently, Hotel companies are offered loans at higher interest rate for developing a new property.

"This will enable hotel companies to avail benefits of lower taxation, utility tariffs, and simplified approval process for projects. Access to lower interest loan, longer periods to repay loans, and resultant shortening of the gestation period will make hotel investments more attractive and sustainable," says brokerage firm Sharekhan.

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Besides, GST credit to individuals along with income tax filing on hotel stay or holiday package would drive up discretionary spends and will be positive for hotel companies to post higher demand in the coming years.  

As per sharekhan, full exemption on expenses incurred on meetings/conferences held in hotels will encourage companies to hold meetings and conferences within the country. Expenses incurred by corporates for meetings and conferences abroad should not be considered as business expenditure.

The hospitality sector also seeks extension of the timeline for export obligation under the EPCG scheme and grant export status to the industry.  

Incentives should be offered to corporates for meetings and conferences conducted domestically. Further, meetings and conferences, which are conducted abroad, should not be considered as business expenditure. This will discourage MICE events abroad and help in conserving foreign exchange while boosting sales of domestic hospitality businesses  

It also wants the government to put corporate bookings and MICE under IGST. "This will help companies to avail GST input credit, which will encourage them to spend their annual budgets in India rather than opting for South East Asian destinations, "says Nirmal Bang Institutional Equities in its report.  

It wants the government to Incentivise domestic travel through tax cuts or by way of tax deductions for a minimum 2-3 years. This will boost domestic travel until foreign travel resumes. LTC cash voucher in lieu of LTC fare shall be given to central government employees to support domestic demand.

Nirmal Bag believes that Nirmala Sitharaman may keep GST structure uniform for hospitality and food industries. "Alcohol may be brought under GST. Currently, it is under excise. The above measures will reduce complexity, enabling MSMEs to focus on core area of operations," the report underlines.