The proposed fringe benefit tax on perks will have a negative impact by raising the cost of domestic and overseas travel by 10 per cent and indirectly hit the tourism sector, the Indian Association of Tour Operators said on Wednesday.
"Ultimately, it will be passed on to the customer and the packages will be expensive by up to 10 per cent," IATO president Subhas Goyal said.
"It is going to have a trickle down effect. If we send our man to accompany the customer on his tour, the entire expense of conveyance, lunch and everything will be taxed. Even telephone bill will be taxed," he said.
Describing the budget as "full of contradictions", he said that the tourism industry has the potential to emerge as the largest employment generator but nothing substantial has been announced
for the growth of tourism in the budget.
The outlay is Rs 786 crore (Rs 7.86 billion), which is short of our expectations, he said adding no priority has been given to the sector despite its great employment potential.
Every 25 seconds a job can be created, he said and added that the bulk of the money has been kept aside for marketing.
"Marketing will not help the growth in tourism unless the infrastructure is there. Accommodation of tourists is the biggest problem we are facing as there is shortage of hotel rooms," Goyal said.
He said that the tourism sector was expecting that government to come up with specific programmes to create rooms and infrastructure, like concessions to builders for building hotels, incentives to hoteliers, and lands at low rates.