Decision to lower GST on hotels brings relief to tourism sector

After announcing major tax sops for Indian industry in the afternoon, the decision of the Goods and services tax (GST) Council to reduce GST burden on various sectors of the economy has brought much-awaited relief to the Indian industry. The GST council, which met in Goa, has decided to reduce GST burden on hotels, gems and jewellery, defence and automobile sectors.

Major beneficiary of the GST reliefs announced by the council is the tourism and hospitality sector in the country which got the long pending demand of capping the highest tax slab reduced from 28% to 18%. As per the amended GST rates applicable to hotels effective from 1 October 2019, hotels with room tariffs below INR 1000 (USD 14.10) will not invite any GST. Hotel rooms which has roof tariff between INR 1,000 (USD 14.10) and INR 7,500 (USD 105.77) per night will be liable for a GST of 12% instead of 18% earlier. The tax on room tariff of above INR7,500 (USD 105.77) has been slashed to 18% from the existing 28%.

Ministry of Tourism, government of India and the private tourism industry in the country has been lobbying hard with the Finance Ministry for reduction on GST on the tourism sector in order to make India a competitive destination. There have been strong indications about a favourable decision from the GST Council this time around especially in the light of slowing down in the foreign tourist arrivals into the country in the last year.

The travel and tourism industry welcomed the decision of the GST Council and the government especially in the wake of slew of favourable announcements on the part of the government to shore up the economy in the wake of strong recessionary trends.

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