Following the announcement of GST slab rates, the tourism and hospitality industry has showed mixed reactions. One of the major factors affecting the tourism and hospitality sector is said to be the GST rates for hotels and restaurants. The hospitality industry has expressed disappointment over the GST rates for hotels and restaurants. The GST council in its meeting at Srinagar has pegged GST for AC eateries and those with liquor licence at 18 per cent, non-air-conditioned restaurants at 12 per cent, hotels charging room rentals between INR1000 and INR 2500 at 12 per cent, INR 2500 and INR 5000 at 18 per cent and above INR 5000 at 28 per cent. Terming the rates as complex, high and uncompetitive, the hotel industry has declared that it will make representation to the Finance Minister and Tourism Minister to review the rates once again.
“The government should realise that while neighbouring countries like Myanmar, Thailand, Singapore, Indonesia and others levy taxes ranging from 5 to 10 per cent, we cannot afford to have these kind of complex and high GST. This is simply not viable. Tourists will simply skip India,” saud Dilip Datwani, president, Hotel and Restaurant Association of Western India (HRAWI).
HRAWI was expecting it to be placed in the five per cent slab.
“The long awaited tax slabs on GST in the travel and hospitality sector have been announced. Overall this seems like a good move for the sector and should help the growth momentum continue. Economy airfares will get marginally cheaper which should drive continued passenger growth in the air market, while Business Class will see a moderate increase. Budget hotels for the ‘aam admi’ have been kept insulated from any increases in tariffs, while the luxury segment might see an increase due to the GST rates announced,” stated Sharat Dhall, COO (B2C), Yatra.com.
“One of the biggest hurdles for Indian hospitality and tourism, in terms of attracting international tourists is its uncompetitive tax structure. A country as small as Singapore witnesses 10.90 million tourists against 6.31 million for India. Nations like Malaysia and Thailand attracted 24.7 million and 19.09 million tourists in 2014 and earned foreign exchange of US$ 18,299 million and US$ 26,256 million. In contrast, India managed to earn a meagre US$ 94 million,” commented Bharat Malkani, past president, HRAWI.
“By rationalising taxes, India can easily quadruple its tourism revenues, and in absolute terms earn more money for the exchequer. The decision to place hotels in the 18 per cent slab may not be in the best interest of tourism in the country and the industry feels dejected,” added Datwani.
On another note, Ritesh Agarwal, founder and CEO, OYO, said, “A lower tax rate for budget hotels sector will ensure that the industry’s quality upgrade continues while delivering standardised accommodation to millions of middle- class travellers.”
