Federation of Associations in Indian Tourism & Hospitality (FAITH) has sounded the GST commissionerate and the revenue secretary to provide an amendment under Section 2 (44)c to the tourism and hospitality industry. Section 2(44)c, under the draft GST model law, describes an export service as one which is rendered abroad. FAITH has put forwarded the rationale that tourism services to foreign exchange paying tourists can’t be rendered abroad as all their destinations are within India and it is an intangible product, hence an exception needs to be provided in the law itself to the tourism and hospitality industry.
Once tourism and hospitality is classified as an export service, FAITH will request the GST council for a zero per cent rating of GST on tourism and hospitality exports. “This will make our tourism industry extremely competitive globally and remove the uncompetitive 18-25 per cent indirect taxation,” stated a FAITH release.
FAITH will also ask the GST council for a below 10 per cent GST rating on domestic tourism. This is in line with global practices where the introduction of GST has seen tourism GST kept at less than half the standard rate of GST.
The release further said, “Implementation of both of these recommendations have the potential to spur our tourism forex earnings to US$ 30-35 billion from 13-15 million foreign tourists and has our domestic tourism to 1.8- 2 billion domestic visitations. This could double the employment induced by tourism to nine crore jobs from 4.5 crore jobs.”
FAITH, since the past six weeks, has begun a campaign to make the policy markers “aware” and has reached out to chiefs ministers, finance ministers, tourism ministers, chief secretaries, finance secretaries, tourism secretaries of various states, GST empowered ministers, the finance minister and the PMO. They have also shared their concerns with the tourism secretary and tourism minister who have promised to personally to deliver the GST recommendations to the finance minister.
