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Tourism May be Put on Concurrent List Amid Covid Blow: Here's How Hotel Rates Could be Impacted

Wayanad, sharing borders with Karnataka and Tamil Nadu, is a major tourist haven in South India. (Image for representation: PTI Photo)

Wayanad, sharing borders with Karnataka and Tamil Nadu, is a major tourist haven in South India. (Image for representation: PTI Photo)

A Parliamentary Standing Committee recommended that levy of taxes on hotels should be rationalised and industrial rates for power supply, water supply, property tax should be charged.

Acting on a key demand of the hospitality industry, the Ministry of Tourism has initiated a proposal for inclusion of tourism in the Concurrent List of the Constitution which could bring a coordinated approach from the Centre and the states in this arena after the big setback to the sector due to the Covid-19 pandemic.

“The Ministry of Tourism has taken up the issue of inclusion of tourism in the Concurrent List with the ministry concerned, so that tourism can be placed on the national agenda,” the Ministry has said in a reply to a Parliamentary Standing Committee whose report was tabled in Parliament on Tuesday. The Travel and Tourism Sector does not figure in the Centre, State or the Concurrent Lists presently and putting Tourism in Concurrent List is nearly a decade-old demand.

The committee had earlier recommended that since tourism is a multi-sectoral activity, inclusion of tourism in the Concurrent List will play an important role in facilitating the issues involved with multiple Ministries and Organisations at Central level as well as with the States and UTs to create convergence and synergy of actions across multiple agencies and programmes. The Ministry has now acted on it.

The CII in a pre-budget memorandum to the Finance Minister before this year’s budget had also asked for Tourism to be included in the Concurrent list, saying it will enable Centre and states to formulate effective policies for the growth of the tourism sector and effectively regulate the sector. This is also seen as a key move to help the recovery of the sector after the huge impact of the Covid pandemic.

“The Committee takes note of the submission of the Ministry that a proposal for inclusion of tourism in the Concurrent List has been initiated. The Committee sincerely hopes that the proposed measure will provide a level playing field to all the hotels which have been badly hit by the ongoing Covid-19 pandemic. The Committee desires to be kept apprised of the efficacy of the new measures proposed,” the Parliamentary committee has said in its report tabled on Tuesday.

The Committee also observed that one of the bottlenecks in tapping the full potential of the hospitality sector was the high incidence and multiplicity of taxes. “While some states like Maharashtra, Gujarat, Uttarakhand, etc., have accorded industry status to hospitality sector, there is no uniformity in the tax structure across states and the cumulative impact of the present tax structure is that room tariffs in the country have become exorbitantly high, thereby leading to tourist packages being priced out in comparison to competing destinations of other countries who are luring tourists,” the committee has said.

The Committee recommended that levy of taxes on hotels should be rationalized and industrial rates for power supply, water supply, property tax should be charged instead of the commercial rates. “This, in the opinion of the Committee, would be a game changer in reviving this badly hit sector due to Covid-19 pandemic and boost investment in the sector. The Committee, therefore, recommends that the Ministry should immediately initiate policy measures for according Industry status to hotels so that benefits of lower rates of electricity, water, property tax could be extended to hotels and taxes levied on hotels are rationalized and made globally competitive,” the report says.

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first published:August 03, 2021, 14:38 IST