Travel and tourism industry seeks SEIS incentive at 7% only

The travel and tourism industry has urged the government to restore the Service Exports from India Scheme (SEIS) benefit to 7 per cent, as was paid earlier, to support the sector that is one of the worst-hit by the pandemic.

In a representation to the Commerce Ministry, the Indian Association of Tour Operators (IATO) has said that while the decision to release SEIS scrips for FY20 for tour operators is a welcome move, it is disappointing that the benefit has been reduced from 7 to 5 per cent.

“Last one and a half years has been one of the worst phases for the tour operators and in light of the debilitating hardship endured, it is urged that the government restores SEIS benefit to 7 percent as was paid a year before,” IATO President Rajiv Mehra said.

For the last 18 months, inbound tour operators had almost zero income with several of them folding up their businesses. In view of this, the SEIS benefit was awaited for a long time as this would provide some financial succour to help the tourism sector tide over this crisis.

During the deliberations, the government was requested to raise it to 10 per cent as a one-time measure, however, the lowering of the benefit and capping it to Rs 5 crore has disappointed the industry.

The reduction to 5 per cent will impact the small and medium tour operators while cap of Rs 5 crore will badly impact the large tour operators.

“Tourism has contributed significantly to the exchequer and has been a major employer as well. In a distressful situation like this, the tourism sector looks for assistance from the government for survival and revival,” the IATO said in a statement.

Under SEIS Scheme, exporters of selected services were entitled to a incentive on the net foreign exchange earned in the form of duty credit scrips. These SEIS scrips could be used to pay import duty or can be encashed by selling it to any importer.