GST rate cut on hotel tariffs hailed, but falls short of industry expectations

The GST Council may have given a push to hospitality sector with the latest GST rate cuts on hotel tariffs, but more needs to be done to give a full fledged boost to the sector, say industry representatives.

Developing tourism infrastructure and lowering the tax slab in the mid-market segment are the need of the hour to boost the hospitality sector, they said.

Although, GST Council lowered the GST rate on the premium segments, the mid market segment rate remained unchanged at 12 per cent, which continues to be a pain point for consumers and the hotel industry, they said.

"This move shows that the government is responding to our demands but it's too early to comment on the impact that this decision will have on the sector. There is no relief in the crucial mid-market category," said J B Singh, President and CEO, InterGlobe Hotels (IGH).

Also read:GST rate cut will boost tourism, says hotel industry

“Also, to give a push to the tourism sector there is a need to focus on the long term goals such as building tourism infrastructure and tourism products in the country,” he added.

The GST Council on Friday has given a nod to reduce the rates on hotel tariffs . Now, the rooms with the tariff of ₹ 7,500 and above will attract a GST of 18 per cent instead of 28 per cent. While, the rooms with tariff between ₹ 1, 001 and ₹ 7, 500 will be taxed at 12 per cent.

Also, there will be no GST would be charged on the room tariffs upto ₹ 1,000.

"The 18 per cent GST is still high in this competitive scenario, it would have been better if it was kept between 12 per cent to 15 per cent for the rooms with tariff of ₹ 7,500 and above. However, with this announcement I feel that our voices have been heard," said Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurant Associations of India (FHRAI).

Meanwhile, Industry experts are of the view that to boost tourism and to make India competitive among domestic and foreign travellers from the leisure perspective, more steps are to be taken.

With increase in the number of flights and cheaper air fares, the neighbouring countries have become more accessible. Today, Goa is getting competition from Phuket.

Meanwhile, with peak wedding and winter holiday season around the corner, the hospitality sector is expected to give some benefits to the consumers.

“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 (IATO). “We will reduce our rates and would request the hotels to make a cut in the prices too,” Sarkar said.

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