Policy

FAITH urges Centre to review and rationalise GST on tourism value chain

Our Bureau New Delhi | Updated on May 20, 2021

Say hospitality players must be allowed to get a refund of unutilised GST credit lying with State governments

The Federation of Associations in Indian Tourism and Hospitality (FAITH) on Thursday urged the Finance Ministry and Tourism Ministry for measure for review and rationalisation of GST in terms of the Indian tourism value chain. This comes as the GST Council is set to meet next week.

FAITH is the policy federation of all the national associations representing the tourism, travel, and hospitality industry in India.

“FAITH has suggested initiating the process of undertaking a review and rationalisation of GST applicable across different aspects of the Indian tourism, travel & hospitality industry. They said that this rationalisation will enable some rationale support once the tourism industry attempts to begin its long crawl back from the pandemic,” it stated.

Recommendations

Among the various measures recommended include tourism, travel and hospitality players must be allowed to get a refund of unutilised GST credit lying with State governments to enable them to get much needed liquidity.

The industry body has also suggested that hotels should be enable to charge 12 per cent GST with full set-offs irrespective of their tariff categories, in a bid to ensure that Indian hospitality GST becomes more competitive globally. It added that restaurant should be allowed the option of charging GST at 12 per cent with full Input Tax Credits and the rate should be delinked from any room tariffs if they are part of hotels.

‘Charging IGST’

“Hotels should be allowed to charge IGST which will enable seamless availability of credit across India to all travel agents and tour operators and will thereby lead to building up a sustainable domestic holidays, meetings and conventions business within the country,” the industry body stated in its submission.

“Tour operators should be enabled a special presumptive GST rate of 1.8 per cent with full GST set-offs. The current rate of 5 per cent without set-offs 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 added.

Published on May 20, 2021

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