New Delhi, Feb 24 The Federation of Associations in Indian Tourism & Hospitality (FAITH) has requested the Union Tourism Minister G Kishan Reddy to take up the goods and services tax (GST) concerns of the industry with the Group of Ministers and evaluate the tax rate structure.

The Federation – which represents various tourism and hospitality bodies – said the sector is “just coming out of its worst phase” and this would be the right time to incentivize both tourism supply and demand.

In its representation to the Union Minister, the industry body has said, hotels should be allowed to charge Integrated Goods and Services Tax (IGST) that will ensure credit availability to all travel agents and tour operators. This in turn will help build sustainable domestic holiday, meetings and conventions business demand.

Among the other concerns it said, restaurants be allowed the option to charge GST at 12 per cent with input tax credits. This rate has to be delinked from room tariffs.

GST Refunds

A special presumptive GST rate of 1.8 per cent with full GST setoffs be allowed. “The current rate of 5 per cent without setoffs structurally implies that tour operators have an inbuilt margin of around 27.8 per cent which is an inherently flawed assumption in the internet economy,” it explained.

Tourism, travel & hospitality players must be allowed to get a refund of any unutilised GST credit lying with state governments that will enable them to get much needed liquidity.

The Federation has also pointed out that GST refund on purchase by foreign tourists needs to be implemented while Tax Refund for Tourists (TRT) Scheme of the IGST Act and its applicability be ensured across all the product and tourism services availed by them in India. “This will prevent India from exporting its taxes on tourism and will increase our global competitiveness in world tourism,” FAITH added.