Tourism Taxation

TOURISM TAXATIONTOURISM TAXATION

Abhinav Maurya

Taxation

The most important source of revenue of the government is taxes. The act of levying taxes is called taxation. A tax is a compulsory charge or

payment imposed by government on individuals or corporations. The persons who are taxed have to pay the taxes irrespective of any corresponding

return from the goods or services by the government. The taxes may be imposed on the

income and wealth of persons or corporations and the rate of taxes may vary.

Objectives of TaxesObjectives of Taxes

Raising RevenueRaising Revenue Regulation of Consumption and ProductionRegulation of Consumption and Production Encouraging Domestic IndustriesEncouraging Domestic Industries Stimulating InvestmentStimulating Investment Reducing Income InequalitiesReducing Income Inequalities Promoting Economic GrowthPromoting Economic Growth Development of Backward RegionsDevelopment of Backward Regions Ensuring Price StabilityEnsuring Price Stability

Classification of Taxes

Taxes can be classified into various types Taxes can be classified into various types on the basis of from, nature, aim and on the basis of from, nature, aim and method of taxation. the most common and method of taxation. the most common and traditional classification is to classify into traditional classification is to classify into direct and indirect taxesdirect and indirect taxes..

Direct TaxDirect Tax Indirect taxIndirect tax

Direct taxesA direct tax is that tax whose burden is borne by the same person on whom it is levied. The ultimate burden of taxation falls on the person on whom the tax is levied. It is based on the income and property of a person. Thus income tax, corporation tax on company’s profits, property tax, capital gains tax, wealth tax etc are examples of direct taxes.

Indirect taxesAn indirect tax is that tax which is initially paid by one individual, but the burden of which is passed over to some other individual who ultimately bears it. It is levied on the expenditure of a person. Excise duty, sales tax, custom duties etc are examples of indirect taxes.

TOURISM TAXTOURISM TAX

Taxation in IndiaTaxation in India

Taxes in IndiaTaxes in India are levied by the  are levied by the Central Government and the  and the state governments. Some minor taxes are also  governments. Some minor taxes are also levied by the local authorities such as the levied by the local authorities such as the Municipality.Municipality.

Tourism taxes can be categorized into five broad groups as given

below

Airlines and airports - Road transportation and other transport related Hotels and other accommodation Food and beverages Providers of tourism services

Sector Name of tax Payable by

Entry/exit tax

Resident departure tax/foreign travel tax Customer

Visa/travel permit Customer

Air travel

Air passenger duty Customer

Air ticket tax Customer

Airline fuel tax Business

Airport/seaport/road borders

Departure tax Customer

Passenger service tax Customer

Airport security tax Customer

Airport parking tax Customer

Tourism Tax

Sector

Hotel accommodation

Name of tax

Bed night tax

Payable by

Customer

Bed tax Customer

Occupation tax Customer

Differential VAT tax Customer

Surtax Customer

Sales tax Customer

Service tax Customer

Turnover tax Business

Hotel and restaurant tax Customer

Temporary lodging tax Customer

Hotel accommodation tax Customer

Lodging tax Customer

Fringe benefit tax Business

Payroll tax Business

Customs and excise Business

Sales tax/VAT Customer

Sector

Restaurant

Name of tax

Sales tax/VAT

Payable by

Customer

Liquor taxes/duties Business

Road taxToll charges Customer

Fuel taxes/duties Business

Car rental

Municipal/local taxes Customer

Purchase duty Business

Petrol/diesel duty Customer

Coaches

Purchase duty Customer

Specific additional tax Business

Tourist transport tax Customer

Visitor attraction

Visitor attraction tax Customer

VAT/sales tax Customer

TrainingIndustry training tax Business

Catering tax Business

Eco-tourism tax Business

Carbon tax Business

TOURISM TAX- TAX ON TOURISM TAX- TAX ON ‘OUTSIDERS’?‘OUTSIDERS’?

Tourist taxes have become an important source Tourist taxes have become an important source of revenue for many tourist destinations. of revenue for many tourist destinations.

Taxes on accommodation are upheld by their Taxes on accommodation are upheld by their proponents as a way of shifting the local tax proponents as a way of shifting the local tax burden on to burden on to non-residentsnon-residents..

However, the travel industry claims that these However, the travel industry claims that these levies do significant damage to their level of levies do significant damage to their level of competitiveness. competitiveness.

Thank you