Goa Tourism : Pranab Delivers a Triple Blow on Goa Tourism

PANAJI: The Union Budget has delivered a triple blow on Goa tourism industry as flying into the state, staying in hotels and eating in restaurants are set to get costlier. As far as eating out is concerned, the common man has not been spared either.

Domestic air travel will cost more with the government raising service tax on it by Rs 50 and Rs 250 for domestic and international trips respectively. "The government thinks it can milk the air travel sector as it sees it as glamorous. This is not the case. Even average income employees now travel by air. This is going to deter the common man from air travel. For the tourism industry this is a bad budget," Raj Travels franchisee Nilesh Shah said.

The finance minister also proposed a 10% service tax on hotel accommodation in excess of Rs 1,000 a day. He, however, mentioned an abatement of 50% so that the effective burden is 5%. This means that on a room tariff of Rs 1,000, the guest will pay service tax on Rs 500.

Similarly, a 10% service tax will be imposed on AC restaurants serving liquor, but an abatement of 70% has been given. The effective burden will be 3% of the bill. This means that diners running up a bill of Rs 1,000 will be given an abatement on Rs 700 and charged 10% service tax on Rs 300. This works out to Rs 30, which is 3% of the bill.

The Travel and Tourism Association of Goa (TTAG) says this could be seen as a sweetener to a bitter pill, but it doesn't change the fact that additional taxes have been imposed on the industry and onto the customer. "A customer already pays 12.5% VAT on food and beverages and 20% on alcohol. With service tax introduced, the final bill is going to be heavier," TTAG spokesperson Ralph de Sousa said.

"This has been a disappointing Budget. A large percentage of Goa tourism industry is going to be affected. TTAG is going to make a representation to the Union finance minister with figures and the extent of how this is going to affect the state's tourism," de Sousa added.

src: http://articles.timesofindia.indiatimes.com/2011-03-01/goa/28643226_1_service-tax-ttag-abatement