Services sector, the mainstay of Indian economy, may receive special attention in the Budget for 2021-22, according to official sources.
Trade, tourism, hotels and communication — which have borne the brunt during the pandemic but haven’t been paid much attention by the government — may also expect some tax concessions and slight policy-tweaking to recover from Covid-19 blues.
The most probable relief measures to be announced during the Union Budget on February 1 are income tax exemptions on travel within India and income tax holiday to the tourism industry for a couple of years to keep the industry afloat, sources said.
They said the rationalisation of goods and services rates on certain services was also on the government’s mind, but it will have to be discussed within the GST Council.
“Relief for the services sector as a whole is being worked out. We have received representations from various quarters. Hopefully, there will be substantial concessions for many of them, which have been left out,” said an official on condition of anonymity, admitting that the closure of borders with certain countries has hit the sector badly.
The services sector is responsible for over 44% of India’s total employment.
The Federation of Hotel and Restaurant Associations of India (FHRAI) has recommended a minimum alternative tax (MAT) waiver for a period of three years beginning April 2021.
Other than this, concessions for the services sector may come in the form of permission for external commercial borrowing, reforms for special economic zones and a one-time restructuring of loans for struggling sectors.
The healthcare sector, which has emerged as one of the most critical ones due to Covid-19, may also get tax holidays along with other incentives for investments in hospitals and diagnostic centres.