Proposed Way Forward for The Hospitality Sector Post Covid-19

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1 The Hospitality Sector Post Covid-19

1.1 Some pointer indicating the relief the industry looks forward to being as follows:

1.2 Advise credit card companies to:

2 Reference

2.1 Related

The Hospitality Sector Post Covid-19

Anumber of countries like United Kingdom, Australia and Indonesia have taken a host of measures

to reduce the impact of COVID-19 on the sector. The actions undertaken by them are: 

1. Reduced taxes: Business rates taxes for the hospitality sector have been completely abolished for around 12 months.
2. Working capital requirement: Access to fully guaranteed, unlimited loan by the government to meet the working capital requirements of the hotels.
3. Stimulus packages and tourism relie packages have been introduce: On similar lines, relief needs to be provide to the hotel industry.

Some pointer indicating the relief the industry looks forward to being as follows: 

1. Statutory charges: Waiver of Provident Fund, ESI contribution, GST payments, adjustments of advance tax, property taxes, excise & VAT and levies on utilities such as power & water;
2. Statutory liabilities: Deferment of applicable statutory liabilities;
3. Working capital loan: Interest-free 10 year working capital loan;
4. Increase moratorium period: Increasing the bank moratorium period to 12 months with the scope of further increase of this moratorium. For micro & small enterprises, explore a waiver period of interest beyond one year.
5. Credit agencies to suspend corporate ratings: Advise all credit rating agencies to suspend all corporate ratings during this period and to not issue any ‘outlook’ statements which can adversely impact the credit risk profile of companies and, therefore, their cost of funding.
6. Issue tax-free bonds: India Infrastructure Finance Company Limited to issue tax-free bonds for distress funding of COVID-19 revival which are guarantee by the Government.
7. Micro & small enterprises: For micro & small enterprises in tourism, travel & hospitality, explore the waiver of term loans below Rs. 20 lacs completely. Enhance the definition of micro & small enterprises liberally.
8. Relax NPA criteria: Advise banks to relax the non-performing asset (NPA) criteria for the next 24 months.
9. Issuance of loans without collaterals: Extend an instant approval of new loans without any collaterals.
10. Advise insurance companies to defer all renewals: Advice insurance companies to retain a liberal view of the impact on revenue & profit coverage resulting from this epidemic. The Government could even look at setting up a fund to underwrite the losses emerging from this unprecedented revenue disruption to the Indian tourism, travel & hospitality industry.

Advise credit card companies to:

1. waive off interest payments for one year.
2. issue agency corporate cards without collaterals upto Rs. 50 lakhs and, thereafter, 30% collaterals on additional limits with a minimum credit of 35 days and to be accept by all airlines at no additional costs.
3. VISA/ Master card may be request to rationalize the commission % on credit card collections

12. Tax relaxations:

1. Enable the GST & VAT already collect to be used by companies as working capital and to be deposit post 12 months without attracting penal interest.
2. Amount blocked in Income tax refunds, should be release immediately with due interest.
3. Address immediately the Property Tax issues across cities, for example, as going on in Mumbai for the past 10 years. Several crores paid under protest by Mumbai hotels is stuck. Request for a quick resolution and release of the amount thus paid along with interest.
4. Waiver of Custom and GST requested on Imported Liquor, Cigars for next one year.
5. GST cess should be allow to be adjust for inter head i.e. payment of CGST, SGST or IGST.[1]

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Reference

[1] https://www.traveltrendstoday.in/news/india-tourism/item/8233-details-on-faith-s-request-for-financial-relief-from-the-govt-for-the-industry