Hotel industry on September 20 welcomed the reduction in GST on hotel room tariffs that, it said, will provide a major fillip to the hospitality and tourism sector. Finance Minister Nirmala Sitharaman announced nil tax for hotels room tariffs of up to Rs 1,000 per night. Hotels charging Rs 1,001 to Rs 7,500 per night would be levied with 12 percent tax as against the existing 18 percent. Similarly, the tax on room tariff of above Rs 7,500 has been slashed to 18 percent from the existing 28 percent. Also, tax on outdoor catering has been reduced to 5 percent from existing 18 percent with input tax credit, Sitharaman said.
Welcoming the move, Federation of Associations in Indian Tourism & Hospitality (FAITH) Chairman and ITC ED Nakul Anand said: “The news on GST rationalization comes as a big shot in the arm for the tourism industry. This adds great spurt and momentum to the Hospitality industry and creates a positive sentiment that ensures more vigour and strength to Destination India.” The lower tax rates announced by the GST Council on Friday can give a boost to tourism and hospitality sector ahead of the peak winter holiday season, industry experts said.
“We welcome the move as the industry was following up with the government on this for a while. Our voice has been heard finally. Now, those foreign and Indian tourists who were flocking to neighbouring countries can consider India as an option too,” said Gurbaxish Singh Kohli, Vice-President, Federation of Hotel and Restaurant Associations of India (FHRAI). However, the 18 per cent GST is still high and it should have been reduced to around 12 per cent. But the latest announcements come as a breather, he added.
“ The GST rate rationalisation for hotels is an extremely positive development which augurs very well for the tourism industry. We are grateful to the Finance Minister for having considered this demand of the industry which is bound to create a good sentiment all across travel, trade and hotels,” said Dipak Haksar, Chairman CII National Committee on Tourism & Hospitality and Chief Executive, ITC Hotels.
The move will give a boost to the tourism and will bring job opportunities in the sector. The end users will get the benefit of this announcement, said Pronab Sarkar, President, Indian Association of Tour Operators. “We will reduce our rates and would request the hotels to make a cut in the prices,” Sarkar said.