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he hospitality sector, hit hard by lower tourist footfalls in the wake of the global economic downturn, is looking forward to a series of concessions from the forthcoming Budget.

Travel and hospitality industry officials said their major expectations include reduction in luxury tax, tax holidays at key destinations and industrial hubs, loans at concessional interest rates, and granting of infrastructure status to the hotel segment for easy funding.

Carlson Hotels Executive Vice-President (South Asia) K B Kachru wants revival of the infrastructure status for the hotel industry which was withdrawn in 2001.

"This will facilitate taxation benefits on new hotel projects and make them more profitable," Kachru said, adding that a uniform luxury tax across all states, capped at 10 per cent, would be welcome.

Also, there should be "separate guidelines for project appraisals by banks and financial institutions," he said.

The downslide in the sector can be gauged from the fact that the arrival of foreign tourists in India, according to Ministry of Tourism figures, during January-May this year dipped by 10.59 per cent to 21.27 lakh, from 23.79 lakh during the same period last year.

The country earned Rs 20,892 crore worth of foreign exchange from inbound travelers during the first five months of 2009, a fall of 6.80 per cent over the figure of Rs 22,416 crore during January-May period of last year.

Starwood Hotels and Resorts, which owns global brands like Sheraton and Le Meridien, has also supported the call for infrastructure status.

"The hotel industry is one of the largest employers in the country and involves huge investments. Grant of infrastructure status with its resulting tax benefits is very essential," Starwood Hotels and Resorts Regional Director, Sales and Marketing (India, Bangladesh and Maldives), Larry Malarkar said.

Leading travel portal Yatra.com said the government should waive off the service tax for sale of flight tickets through Online Travel Agencies.

"The online travel industry is USD 800 million in the country and growing at 35 per cent annually. A lot of it depends on air travel transactions," Yatra.com Chief Executive Officer Dhruv Shringi said.

He said that Aviation Turbine Fuel should be brought under the central sales tax regime. "This will reduce its price and help make air travel cheaper (which is good for online travel sector)," Shringi added.

Travel Agents Association of India (TAAI), the travel operators' body, has asked the government to grant export industry status to tourism sector and exempt travel agents from paying service tax for five years.

Besides, TAAI President Rajji Rai said that section 80 HHD of the Income Tax Act, 1961 should be revived so that travel agents are allowed to transfer part of their profit to Tourism Development Reserves for investment in tourism-related projects.