The Goods and Services Tax has had a "negative" effect on tourism in Jammu and Kashmir, a parliamentary panel has noted, adding the Centre should reconsider the indirect tax regime on tourism-related activities in the northern state.
The Committee on Development of Tourism in Jammu and Kashmir, in its report, said according to the stakeholders, sourcing of products and materials is an issue in the state.
It said unlike other states, residents of Jammu and Kashmir and its business owners spend huge amounts of money on procuring essentials, most of which have to be flown in, which increases their capital expenditure.
"The sensitive nature of Jammu and Kashmir must be taken into consideration during the development of tourism in the region. The implementation of GST on tourism in the region will have manifold effects, mostly negative on its economy," the committee said.
It said small business owners of small-scale hotels, bed and breakfasts and home stays cannot list their properties on various travel intermediary websites as there is a levy of 18 per cent of GST, which cuts across the little profit they make, making their venture "unsustainable".
"In this regard, the Committee recommends that the implementation of Goods and Services Tax (GST) on tourism-related activities in the state must be reconsidered. It must be done in a cautious and phased manner in order to ensure that the delicate state of tourism in the region is not adversely affected," the panel said, adding the Ministry of Tourism must initiate dialogue with the Finance Ministry in this regard.
The Committee also expressed worry over the "negative publicity" which it cited as a major hindrance to increasing footfall in the region.
"This perception overshadows the true narrative of the region as not all parts of the state are in conflict or affected by it," it remarked.
The panel also recommended that the Tourism Ministry organise its own publicity campaign in order to remove the negative impression of the state which is based on incorrect facts.
The ministry should also involve the Ministry of Information and Broadcasting and the External Affairs Ministry for the removal of advisories imposed by various countries against travel to Jammu and Kashmir, the parliamentary panel added.