Ahead of the Union Budget 2025, the tourism sector is once again raising its voice for urgent reforms to support its growth trajectory. The expectations from Finance minister Nirmala Sitharaman's upcoming budget are high, with industry leaders highlighting a series of measures that they feel are crucial for boosting both domestic and international tourism.
A key request from the sector is for the government to grant the long-awaited industry status to the hospitality sector. Tourism stakeholders believe this step would unlock greater investments and foster more development within the industry. However, the absence of this status so far has left many wondering whether the government truly recognizes the strategic importance of tourism in India’s economic recovery.
industry experts also urge the government to introduce GST credit for hotel construction, a move that could significantly reduce the cost of building new accommodations. Additionally, there is a call for rationalizing GST rates in order to alleviate financial burdens on the hospitality industry, which has struggled with high operational costs in the wake of the pandemic. Though these measures are long overdue, the fear remains that without them, the sector will continue to face unnecessary financial strain.
The Incredible india initiative, a hallmark of India’s tourism campaigns, is another area where the sector hopes to see substantial investment. There is a clear demand for dedicated resources toward an international tourism campaign that can help position india as a prime global destination. However, without proper funding and strategy, the campaign’s impact may continue to be limited, leaving india overshadowed by more aggressive global competitors.
Homestays, a rapidly growing sector in the indian tourism landscape, are also facing hurdles. The government's decision to classify rental income from residential properties as 'Income from house Property' rather than ‘Business Income’ has raised concerns within the homestay sector. This reclassification is expected to hamper growth, as it would lead to additional tax liabilities and administrative challenges for homestay owners. The industry has voiced its concerns, urging a review of this decision, but it remains uncertain whether the government will take any corrective action.
The Online Travel Agents (OTAs) industry has also flagged several issues that could affect its growth. A major concern is the requirement for OTAs to register for GST on a state-wise basis if they have a physical presence in each state. Given that OTAs operate predominantly online, industry leaders argue that this mandate unnecessarily increases costs and operational complexity. The disparity in GST charges for non-AC bus bookings made through online platforms versus direct bookings with bus operators also remains a contentious issue. The inconsistency in tax rates not only undermines the wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital india initiative but also disadvantages indian OTAs against international competitors, who are not subject to such rules.
While the government has laid the groundwork for growth in the tourism sector, industry leaders assert that the 2025 budget presents an opportunity to address these disparities and introduce reforms that will propel the sector to its next phase of growth. However, without clear action on these key concerns, there is a risk that the tourism industry will continue to struggle to realize its full potential.
For many in the industry, this budget represents a critical moment. Will the government heed the call for transformative changes, or will the tourism sector continue to face unnecessary barriers to growth? As the budget approaches, all eyes will be on the Finance Minister’s response to these urgent demands.
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