GST rate cut on five-star hotel stays will propel tourist inflows: Experts

Garima Singh New Delhi | Updated on September 16, 2019 Published on September 16, 2019

The high GST rate acts as a dampener not only for foreign tourists coming to India, but also for domestic travellers   -  SPECIAL ARRANGEMENT

The Government’s plan to cut e-visa fee for foreign tourists visiting India is a right step, but more needs to be done, such as reduction in GST rate on five-star hotel stays, to improve tourist flows into the country, say industry insiders.

Pronab Sarkar, President, Indian Association of Tour Operators (IATO), said: “To make changes in e-visa is the work half done. The major impact will be seen only when the GST rates are reduced. Currently, the GST on five-star hotels is as high as 28 per cent and extra tax of 5 per cent is on the package made by the tour operators. So, there is tax on tax.”.

The high GST rate acts as a dampener for not only the foreign tourists coming to India, but also domestic travellers, who prefer to travel to nearby countries rather than pay high GST rates for hotels within the country, he added.

According to industry insiders, India is facing tough competition from neighbouring destinations such as Singapore, UAE, Malaysia and Thailand as the overall package to travel to these countries is lower than travel within India.

“The reduction in the e-visa fee can help in increasing the inflow of tourists by 10-15 per cent but the entire package will become lucrative only when the GST on hotels come down,” said Subhash Goyal, Chairman, Assocham expert committee on tourism.

Last month, Tourism Minister Prahlad Singh Patel had announced that India will have different e-visa fee for the peak as well as lean periods for the travellers planning to visit India for a short duration.

The e-visa fee for a duration of 30 days during the peak season — from July to March — will be $25. The e-visa fee during the lean period — from April to June — will be at $10, the Minister had said.

Tourist arrivals

According to available data, in July, a total of 1,77,084 tourists arrived on e-tourist visa as compared to 1,58,337 during the same month last year, registering a growth of 11.8 per cent.

In the six-month period from January- July 2019, a total of 15,34,293 tourist arrived on e-tourist visa as compared to 12,68,077 during January-July 2018.

Published on September 16, 2019
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