Minister to push for lower GST on high-end hotels

The Tourism Ministry will take up the industry’s concern on steep GST rates on high-end hotel rooms with the Finance Ministry and propose bringing them down to create a “level-playing field’’, said Union Tourism Minister KJ Alphons.

To enable mid-segment hotels to qualify for infrastructure status and priority lending, the Ministry is also working on a Cabinet note to bring down the threshold limit for hotel projects to ₹50 crore from the current ₹200 crore, the Minister said at a press conference on Monday following a day-long conference with CEOs of tourism-related companies and start-ups.

“We have set a target of increasing the annual foreign tourist arrivals into the country to 40 million from the present 14.4 million in five years’ time and also increase job creation to 100 million from the present 43 million. These targets can be achieved by identifying the problems faced by the industry and sorting them out,” Alphons said.

On the present GST structure, the Minister said that the industry strongly felt that the 28 per cent rate on high-end rooms was much too high when compared globally.

“People compare taxes throughout the world and if one finds that taxes in competing countries are lower at 10 per cent or 12 per cent, it takes away the level playing field. We will surely discuss this concern with the Finance Ministry and ask for lowering of the tax rate,” he said.

The tourism-sector CEO forum was jointly organised by the Department of Industrial Policy and Promotion and the Tourism Ministry. “There were 111 delegates including 35 start-ups and eight representatives from States,” said DIPP Secretary Ramesh Abhishek.

The participants pointed out that there was a shortage of 2 lakh hotel rooms in the country, particularly in the mid-segment with tariff or ₹2,000 or below.

“Extending infrastructure status to middle-range hotels and ensuring adequate and cheap credit to them will attract investment in the segment,” Alphons said.

The high cost of land was another factor identified by the CEOs as a constraint inhibiting growth of tourism and hotels in the country.

“We are proposing that land should be made available on lease, something on the lines of the Taj Man Singh model. Under this proposed structure, the investor can give a small lease amount and then pay a percentage of turnover,” the Minister added.

The Tourism Ministry is also exploring the idea of setting up a National Tourism Board to regulate activities within the sector including functioning of home-stays.