Last updated: 10:30 AM ET, Tue March 24 2015

High Taxes on Tourism are Hampering India as a Travel Destination

Features & Advice | Donald Wood | March 24, 2015

High Taxes on Tourism are Hampering India as a Travel Destination

Photo courtesy of Incredible India

Tourism in India is steadily growing, but a high tax bracket has resulted in the nation being the costliest travel destinations in the world.

According to, visitors arriving in India are forced to pay up to 20 percent extra in taxes for services and products. For comparison, travelers who choose to visit Malaysia and Thailand pay an average of eight percent extra for taxes.

The tourism ministry is reporting, via, about why many visitors are choosing to travel to other destinations in Asia instead of India:

“Taxes levied on inbound tourism of the major reasons for India losing Foreign Tourists to competing South East Asian countries. The major competing tourist destinations like Malaysia, Singapore and Thailand have lower tax rates on services and products that are provided in the tourism sector.”

Lower taxes have helped other Asian nations in the tourism department. China’s average of 4.9 percent taxes has been a major contributor to the rush of travelers, totaling 55.7 million in 2013. Malaysia and Thailand’s lower taxes also helped each country’s tourism, resulting in 25.7 million and 26.5 million foreign tourists respectively in 2013.

On the other hand, India only hosted 6.97 million tourists in 2013.

India Prime Minister Narendra Modi was part of a government group that commissioned a study to find out the reason behind the lack of tourism. Just as expected, the sky-high taxes on common items and services are a major deterrent.

The tourism ministry commissioned the study in 2012 and it was delivered to the government two months ago. Earlier this week, Tourism Minister Mahesh Sharma was asked to supply tax incentives for the travel industry in order to help spark an influx of visitors to the nation.

The hope for the Indian tourism businesses is that the country sees the error of its ways. There is plenty of money to be made off international tourism, and a nation like India would be foolish not to capitalize on the market.

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