NEW DELHI: The Union tourism ministry has written to the Finance Minister, Mr Pranab Mukherjee seeking rollback of the proposed service tax on hotels and restaurants as it feels that the measure may have an adverse impact on the sector.
“It (service tax proposal) is a matter of concern for us. I have already written to the Finance Minister to reconsider it,” the Tourism Minister, Mr Subodh Kant Sahai said after a meeting of the national tourism advisory committee here.
The government had in the 2011-12 budget proposed to levy service tax on hotel rooms and AC restaurants which have licence to serve liquor. The proposal is strongly opposed by the tourism industry which fears that this will affect the flow of tourists adversely.
Pressing for the rollback of the service tax proposal, Mr Sahai said, “The government and policymakers should realise the fact that tourism sector is a forex and employment generating sector.”
India received about 5.58 million foreign tourists in 2010, which is much less than tourist arrivals in China.
“Though the rollback issue does not come in reply in Parliament, I will talk to him (Finance Minister) again,” Mr Sahai said.
On poor infrastructure, he said, “We are trying to improve the tourism infrastructure to provide good comfort to tourists. Steps are undertaken to develop more tourist circuits.”
About his action plan for the sector, he said, “We are exploring the possibilities of developing tourist circuits on a mission mode like JNNURM. If cities’ infrastructure can be developed under JNNURM then the same formula can be replicated in tourism sector also.”
Mr Mukherjee on Monday hinted at review of his proposal to impose 5 per cent service tax on high-end health care services which was described as “misery tax” by the medical community.
Apparently referring to the proposed 5 per cent service tax on high-end health care, he said: “That (review of tax proposals) can be announced or decided only at the time of finance bill. Therefore I will request those who are agitating to wait till the finance bill is being approved by Parliament,” he said.
The House later returned the appropriation bills, completing the first phase of the three-stage exercise for passage of the budget.
The Lok Sabha had earlier approved the Supplementary demands for grants for 2010-11 and relevant Appropriation Bills.
Mr Mukherjee in the budget for 2011-12 proposed to impose a service tax of 5 per cent on all services, including diagnostic services provided by a centrally air-conditioned clinical establishments having more than 25 beds for in-patient treatment.
The proposal evoked sharp reaction from the medical community which described the service tax on healthcare as “misery tax”. They have also submitted representation against the proposal to the Finance Minister.