March 8, 2002

‘35’

INCENTIVES TO TOURISM IN THE BUDGET 2002-2003

• Recognition that Tourism constitutes a priority area in view of its beneficial impact on growth of employment, generation of foreign exchange and promotion of greater national integration through domestic tourism.
• Increase in Plan outlay by 50 per cent from Rs. 150 crore to Rs. 225 crore.
• Six tourism circuits to be identified for development to international standards during 2002-2003.
• Special purpose vehicle will be permitted to raise resources from both public and private sectors for infrastructure development in these circuits.
• Development of the World Heritage Site of Hampi as an international destination for tourism.
• Decision to upgrade the international airports at Delhi, Mumbai, Chennai and Kolkatta to standards of world class airports by inducing private sector management.
• New incentives to Greenfield airport projects.
• Exemption of Air Travel Tax on air travels from and to North East.
• Service tax exemption given earlier to be extended for one more year: In cases of functions and banquets where the entire bill is for catering services no service tax would be charged, benefits ultimately will go to consumers.
• Expenditure Tax on hotels henceforth to apply only to room charges: Earlier Expenditure Tax was charged on room charges as well as other services.
• Threshold of Rs. 2000 raised to Rs. 3000 for levy of Expenditure Tax.
• Disparities between 80 HHC and 80 HHD removed for the benefit of Hotel Industry: Under Section 80 HHC the exemption is for 100 per cent of the total foreign exchange earnings. But for hotels under 80 HHD it was 50 per cent and the balance was exempted if it was kept in a reserve and use for specified purposes. Now this disparity stands removed.
• Deduction of 50 per cent of profits earned by units setting up convention centres will be allowed for 5 years under 80-IB : This will help in bringing up new convention centres.
• Customs Duty on imported liquor reduced from 210 per cent to 182 per cent, which was long pending demand of hospitality industry catering foreign tourists.
• The deduction at source under Section 194-H reduced from 10 per cent to 5 per cent: This would benefit the hotels as well as travel and tour operators.