Hospitality industry welcomes reduction of GST cap on room tariffs

The GST Council’s move to reduce GST rate from 28 per cent to 18 per cent on hotel room tariffs has been welcomed by industry insiders. As per the announcement, 18 per cent GST will be applied on room tariffs of ₹7500 and above and rooms tariffs between ₹1000 to ₹7500 will attract GST of 12 per cent. However, the GST rate on room tariffs up to ₹1,000 will remain unchanged at 0 per cent.

The Hotel and Restaurant Association of Western India (HRAWI) has lauded this decision stating that it will boost tourism and encourage more foreign tourists to visit India. Likewise, Federation of Hotel and Restaurant Associations of India (FHRAI), the apex body of hotel industry (FHRAI) too consider this as a positive move for the hospitality and tourism market in India.

Expressing his views on this, Gurbaxish Singh Kohli, vice president FHRAI and president, HRAWI said, “FHRAI and HRAWI have been constantly following up with the Government since the introduction of the GST regarding the high rates and its consequential effects not only on the industry but also the revenue earned by the Government. We are glad that our voice has finally been heard. The reduction in the GST rate will make India an attractive tourism destination to foreign as well as domestic tourists who presently choose to vacation in the neighbouring countries on account of price competitiveness.”

According to an official release by HRAWI, neighbouring countries pay five to maximum 12 per cent GST or equivalent tax on room tariffs. Even after lowering of the GST rate to 18 per cent, hotels in India still continue to remain the highest taxed in the world.

The GST cap on room tariffs coupled with reduce visa fee will strengthen India’s position on the international tourism ground. Adding to this, Dipak Deva, managing director Travel Corporation India (TCI) said, “This is one of the best moves to make India competitive. Combined with the visa fees reduction, we are in a very sweet spot. Now it is time that the industry delivers their promise of increasing numbers. The government has done all that they were asked.”