Tour operators' delegation asks FM to raise SEIS scrips' benefit to 10%

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SME Times News Bureau | 16 Jun, 2021
A delegation of the Indian Association of Tour Operators (IATO) called on Union Finance Minister Nirmala Sitharaman at her office on Friday, and urged her to increase SEIS duty credit scrips percentage to 10 per cent.

SEIS or Service Exports from India Scheme (SEIS) incentivises notified service providers with transferable duty credit scrips as a percentage of their net foreign exchange earnings.

This credit can be used by the service providers to pay a number of central duties and taxes, including the basic Customs duty.

SEIS scrips are currently given to tour operators on their forex earnings at the rate of 7 per cent that the industry, which has been one of the worst affected by the Covid-19 pandemic, finds inadequate at the current juncture and has sought an increase.

The IATO delegation, which met the Finance Minister, was led by its President Rajiv Mehra and Pronab Sarkar, the immediate past President.

While the delegation thanked the minister for clearing SEIS for the service providers and for the recent measures like 5 lakh free e-Tourist visas for foreign tourists and granting of loan on government guarantee to small tour operators, it also made her aware of the several pending issues, which if resolved can lead to the revival of the tourism sector in the country.

The delegation impressed on her not just to retain SEIS scrips' percentage of 7 per cent, which is being given to the tour operators for the last couple of years, but raise it to 10 per cent.

If SEIS cannot be increased, it should be retained at 7 per cent without consideration of capping of the turnover of the tour operator, the delegation said.

The IATO delegation also discussed with the minister the cascading effect of multiple GST on tour operators and requested her to remove this ‘anomaly' by charging GST on the deemed total value which could be 10 per cent of gross billing of the tour operators.

This will allow the service to be taxed at 18 per cent on 10 per cent mark-up (their fee), which means the effective rate of GST on the total package cost will work out to 1.8 per cent of gross billing of the tour operator to his client with no input tax credit.

It was also requested that GST/IGST be fully exempted on the services provided outside India, i.e., in the neighbouring countries even if the package includes India tour, as this is causing loss of business for the tour operators.

As a result of tax exemption, bookings will come to Indian tour operators instead of such bookings going to tour operators based in the neighbouring countries. This will add considerable foreign exchange to the country.

Another issue that was taken up was levy of tax collection at source (TCS) on sale of overseas tour package and it was requested that TCS should not be made applicable to persons / companies who are non-resident foreign citizens/tourists/foreign tour operators located outside India for purchasing tour packages through Indian tour operators for outside India specified clearly.

Further, the matter of loan under ECLGS was raised by the delegation, requesting the FM to amend the guidelines issued by NCGTC as banks are not entertaining applications of tour operators for availing the ECLGS scheme benefit. It was given to understand that the revised guidelines are going to be issued to the banks.

Last and the most important point that was taken up with the Finance Minister was the long pending demand of the tourism sector to treat the tourism industry as deemed exporter at par with the IT industry under export of services based on their foreign exchange earnings by relaxing the parameters/definition of export of service and by changing the criteria of place of supply.