Will GST make India tourism sector face a toss?

Published on : Saturday, May 20, 2017

India-UK DealThe Goods and Services Tax Council announced the rates last day which came as a shocker to the Indian hospitality industry. There will be four slabs of 5%, 12%, 18% and 28% which have been introduced for telecom, insurance, hotels and restaurants services.


The hospitality industry expressed their disappointment stating that the rates are too complex, high and uncompetitive. In fact, they will approach Union Finance Minister Arun Jaitely and Union Tourism Minister Mahesh Sharma for a review of the rates.


In reference with the GST Rates announcement, Mr. Sharat Dhall, COO (B2C), Yatra.com said, “The long awaited tax slabs on GST in the travel and hospitality sector have been announced. Overall this seems like a good move for the sector and should help the growth momentum continue. Economy airfares will get marginally cheaper which should drive continued passenger growth in the air market, while Business Class will see a moderate increase. Budget hotels for the aam admi have been kept insulated from any increases in tariffs, while the luxury segment might see an increase due to the GST rates announced.”


Former HRAWI president Bharat Malkani said that a major hurdle for the hospitality and tourism sector in India is its uncompetitive tax structure. Putting it into perspective, countries like Singapore attract 10.9 million tourists, while India gets 6.31 million. Malaysia and Thailand earned foreign exchange worth $18.3 billion and $26.26 billion respectively where India managed only $94 million, said Malkani.


Hospitality industry is not only a high foreign exchange grosser but also is also among the largest tax generators. Gurbaxish Singh Kohli, senior vice-president, HRAWI stated that if GST is not reconsidered, foreign exchange inflow will dry up sooner than later.

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