Tax Relief Sparks Optimism in Key Sectors

The recent tax relief measures introduced by the government have sparked optimism across various sectors, including restaurants, travel, and entertainment. Business leaders are hopeful that these changes will lead to increased consumer spending, benefiting their industries significantly. With more disposable income in the hands of the middle class, businesses are preparing for a potential surge in demand. This article explores the perspectives of industry leaders and the expected impact of these tax reforms.

Restaurant Sector Anticipates Growth

The restaurant industry has faced challenges over the past year, with declining footfalls and increased competition. However, Sagar Daryani, president of the National Restaurant Association of India and co-founder of Wow! Momo, believes that the new tax relief measures will change the landscape. He noted that the higher tax exemption limit will put extra cash in the hands of consumers, encouraging more middle-class families to dine out. This shift is expected to increase foot traffic in malls and restaurants, ultimately improving profitability for businesses.

Despite this optimism, Daryani expressed disappointment over the lack of an extended input tax credit for the restaurant sector. He emphasized that such a measure is crucial to reducing the high mortality rate in the industry, where over 50% of restaurants close within the first two years. Without this support, many establishments may struggle to survive. Nevertheless, the overall sentiment remains positive, with many in the industry looking forward to a revival in consumer spending and job creation.

Alcohol and Beverage Industry Sees Potential

The alcoholic beverage sector is also optimistic about the future. Amar Sinha, chief operating officer at Radico Khaitan, highlighted the government’s focus on boosting discretionary spending. He believes that as disposable incomes rise, consumers will be more inclined to indulge in premium experiences, leading to a surge in demand for quality products. This trend is expected to benefit not only manufacturers but also retailers and distributors in the alcoholic beverage market.

Sinha’s comments reflect a broader trend in consumer behavior. As people have more disposable income, they are likely to spend more on leisure activities, including dining out and purchasing premium alcoholic beverages. This shift could lead to increased sales and profitability for companies in the sector. The tax relief measures are seen as a catalyst for this change, providing the necessary boost for businesses to thrive.

Travel Industry Braces for Expansion

The travel sector is poised for growth, thanks to the tax relief measures and the government’s proposal to expand regional connectivity under the UDAN scheme. Mohak Nahta, founder and CEO of e-visa startup Atlys, described the combination of tax relief and increased limits under the Liberalised Remittance Scheme (LRS) as a “perfect storm” for the travel industry. These changes are expected to encourage more people to travel, both domestically and internationally.

Pramod Arora, CEO of growth and investment at PVR Inox, echoed this sentiment, stating that the tax relief will likely increase consumer spending in cinemas and other mid-level discretionary sectors, including travel. As families and individuals feel more financially secure, they are more likely to invest in experiences such as vacations and entertainment. This renewed interest in travel is expected to create new opportunities for businesses in the sector, from airlines to hotels and tour operators.

Entertainment Sector Ready for Revival

The entertainment industry is also gearing up for a revival. Devang Sampat, managing director of Cinepolis India, expressed confidence that the tax relief measures will put more money directly into the pockets of moviegoers. This increase in disposable income is anticipated to lead to higher attendance at cinemas, allowing families and friends to enjoy the magic of the big screen once again.

Kalyan Krishnamurthy, CEO of Flipkart Group, noted that the significant tax relief for the middle class, along with streamlined TDS/TCS norms, empowers consumers. This boost in purchasing capacity is expected to enhance access to a wider range of quality products and services. Shriti Malhotra, executive chairman of Quest Retail – The Body Shop, emphasized that the increase in the income tax exemption limit to Rs 12 lakh is a decisive step toward boosting urban consumption. This change allows middle-class households greater flexibility and spending power, further fueling optimism in the entertainment sector.

 


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