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Hotel industry hopes for more competitive GST, welcomes partial relief
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Wednesday, 21 June, 2017, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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The hotel industry was hoping for a more competitive and simpler goods and service tax (GST),it has welcomed the partial relief.
The revision of the GST slab on hotel room tariffs, that effectively widens the 18 per cent tax slabto tariffs ranging between Rs2,500 and Rs7,500 (instead of the previous upper limit of Rs5,000), was welcomed by the Hotel and Restaurant Association of Western India (HRAWI).
With the revision, the highest tax rate of 28 per cent has been assigned to tariffs of Rs 7,500 and above.
Besides the revision in the slabs for room tariffs, the GST levied on air-conditioned restaurants, including restaurants in five-star hotels, will be 18 per cent, with effect from July 1, 2017.
“This is unarguably a welcome revision. But, if India has to remain competitive as a tourist destination, this may just not cut the ice,” said Dilip Datwani, president, HRAWI.
“While neighbouring countries pay between five and 12 per cent GST or an equivalent tax, hotels in India would be levying 18 and 28 per cent GST,” he added.
“This may not augur well with foreign inbound tourists, who are lured with significant deals and sops by our neighbours,” Datwani said.
“We should remember that we are living in a very competitive world, and tourists today have a lot of choices,” he added.
It has been HRAWI’s contention that tourism is the one industry that has unlimited potential for job creation and foreign exchange earnings. With a more pragmatic taxation policy, the exchequer could stand to earn three times the current earnings by increasing the base.
“So, while the revision will provide hotels and restaurants some relief, we believe that the GST continues to be unviable even now,” Datwani said.
“India needs to be not just promoted as a tourism destination, but also needs to offer value for money to tourists,” he added.
“With the countries around us levying taxes that are effectively half of our GST rates, in the long term, the tourist inflow is bound to suffer,” Datwani said.
“We are still hopeful that the government reconsiders the GST for hospitality after they assess the results on the sector, post the roll-out,” he added.
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