The Indian Government once again proved that it has no place for the ‘Tourism’ industry in its scheme of things. Instead of offering any bailout package to the bleeding sector, the Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman announced its ‘hostile’ Leave Travel Concession (LTC) Cash Voucher Scheme yesterday.
While announcing the scheme, the Finance Minister said, “The biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.”
The Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale/entitlement is reimbursed and in addition, leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21, the Finance Ministry said.
However, in a strongly worded statement, Federation of Associations in Indian Tourism & Hospitality (FAITH) termed the scheme as a ‘vote of no confidence for travel sector’.
Since this is a 4-year block scheme, it will also cut away funds for future travel demand source for the next year when the LTC block ends in 2021. This thus goes against the spirit of domestic tourism push and year 2021 as domestic tourism year being planned by the tourism ministry, FAITH said in its statement.
It is requested that not only be the LTC funds be restored but also an income tax benefit be introduced for all citizens to get income tax exemption while travelling within India up to ₹1.5 lakhs against GST registered travel agents, hotels tour operators, tourist transporters and restaurants, added the policy federation of all the Indian travel trade national associations.
“The tourism industry instead of being bailed out is now deprived of the LTC fund. Our Industry is collapsing and our employees are losing jobs in every avenue but our own Prime Minister has forgotten our existence. The LTC scheme should have been utilised for promoting ‘Dekho Apna Desh’ initiative announced by the PM. At a time when other countries are announcing second bailout packages, we haven’t even got one,” said Jyoti Mayal, President, Travel Agents Association of India (TAAI).
“LTC scheme should be utilised only for travel and should not be used for other consumables,” said Pradip Lulla, President, Travel Agents Federation of India (TAFI)
After months of standstill, the festive season was one of the few demand drivers that the Indian tourism travel and hospitality industry was hoping to provide some relief. Instead redirecting the LTC money of government employees to buy consumer goods would dry up those funds for the travel sector.
“The most hard-hit segment in the wake of the Coronavirus pandemic is the tourism and hospitality market. We were expecting the Government will announce some measures that will boost the sentiments of people to travel. On the contrary, LTC Cash Voucher scheme has come up as a setback for us,” said Naveen Manchanda, President, Indian Association of Travel & Tourism Experts (IATTE).
Speaking on the same lines, Rajesh Arya, Vice President, Association of Domestic Tour Operators of India (ADTOI) said, “In the absence of a bailout package, scores of tour operators have been forced to close their operations. The present crisis is unprecedented in the history of travel, which has impacted the sentiments of people to travel. We were expecting some positive steps from the government to support the industry. However, we are once again disappointed.”
“At a time when we were expecting support from the Central Government, this step was totally unexpected. The Government should have cancelled LTC for overseas travel and instead allow LTC on domestic travel. The Government should have brought flights, transport, hotels, meals and other expenditures under eligibility criteria to pave way for the same to be spend within the country. Such an initiative would have fallen in line with the thought of our Prime Minister, Narendra Modi who asked Indians to visit at least 15 tourist destinations within India by 2022,” said K. Vijay Mohan, President, Tours & Travels Association of Andhra (TTAA).
The Government has decided to give cash payment in lieu of one LTC during 2018-21, in which:
- Full payment on Leave encashment and
- Payment of fare in 3 flat-rate slabs depending on class of entitlement
- Fare payment will be tax-free
An employee, opting for this scheme, will be required to buy goods / services worth three times the fare and one time the leave encashment before 31st March 2021.
The scheme also requires that money must be spent on goods attracting GST of 12% or more from a GST registered vendor through digital mode. The employee is required to produce GST invoice to avail the benefit.