The Hindu : Sops for tourism, aviation sectors

Online edition of India's National Newspaper
Friday, Mar 01, 2002

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Sops for tourism, aviation sectors

By Our Special Correspondent

NEW DELHI Feb. 28. Finally, the tourism and civil aviation sectors have found a honourable mention in the Union budget, although some sections of the industry were unhappy at tourism not being considered at par with industry.

In view of the slowdown in the industry, the Finance Minister, Yashwant Sinha, has extended the exemption from service tax on services provided by hotels from March 31, 2002 to March 31, 2003. He has also exempted customs duty on airplanes, helicopters, gliders, simulators of airplanes, their parts and raw materials and equipment for airports.

Mr. Sinha said that expenditure tax on hotels would apply only to room charges and would be payable only where such charges were Rs. 3,000 or more a day, as against the existing threshold of Rs. 2,000.

The deduction available under Section 80 HHD of the Income Tax Act for foreign exchange earnings of hotels or tour operators would be enhanced to bring it in line with the deduction available to exporters. A deduction of 50 per cent of the profits earned by units setting up and operating large convention centres would be allowed for five years under Section 80-IB.

Mr. Sinha has raised the allocation for tourism sector by 50 per cent to Rs. 225 crores for 2002-03. As a comprehensive package, he has announced development of six tourism circuits to international standards and concessions for development of greenfield airports with private sector participation.

Special Purpose Vehicles would be permitted to raise resources from both private and public sectors for infrastructure development for the six circuits. The World Heritage Site of Hampi would be developed as an international destination.

The greenfield airports would be developed with private sector participation in terms of availability of land and related infrastructure from State Governments. Such airports would be exempt from Air Travel Tax and Foreign Travel tax on departing passengers for projects located in States that charge sales tax on Aviation Turbine Fuel at Central Tax rates. Inland Air Travel Tax would also be exempt on air travel to and from North-Eastern States.

An advanced development fee would be charged by way of additional passenger service fee at the existing airports to help finance the greenfield airport. There would be levy of user development fee at the new airport and financial assistance-equity participation by the Airports Authority of India.

The proposed new airports at Bangalore and Hyderabad would benefit from these concessions.

The Finance Minister reiterated the Government's intention of upgrading international airports at Delhi, Mumbai, Kolkata and Chennai through long-term leasing with private sector management and investment. Modalities for inviting offers had been finalised and the leasing process would be completed in 2002-03.

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