Budget 2024: Tourism Industry Seeks Uniform 12% GST Rate on Hotels
By: Admin July 11, 2024 Categories: GST Recent News
The travel and tourism industry is urging the government to implement a uniform 12% GST rate on hotels in the upcoming Budget 2024-25. Union Finance Minister Nirmala Sitharaman will present the Budget in the Lok Sabha on July 23.
Simplifying Compliance Processes
MakeMyTrip co-founder and Group CEO highlighted that a uniform GST rate would simplify compliance processes. Currently, the tiered GST system causes price disparities as hotels adjust room rates based on demand. For example, a room night costing ₹10,000 falls under the 18% GST rate, while an off-season rate of ₹7,000 falls under the 12% GST rate.
He suggested the elimination of disparities between e-commerce operators and suppliers in the domestic market. Currently, a 5% GST charge applies when booking a non-AC bus through an e-commerce platform, whereas direct bookings from a bus operator are exempt.
Additionally, he proposed tax incentives for hotels and homestays adopting sustainable practices, aligning with India’s commitment to the United Nations Sustainable Development Goals (SDG 11 and SDG 13).
Global Comparisons and Investment Incentives
The Hotel and Restaurant Association (Western India) president emphasized that tourism and hospitality constitute approximately 10% of India’s GDP and should be designated as a priority sector. He advocated for granting infrastructure status to hotels and convention centers with project costs of ₹10 crore and above to attract investments and accelerate growth.
He pointed out that India’s current GST rates for hospitality are among the highest globally, increasing the cost of tourism. The president urged merging the 18% GST category for hotels with room rates above ₹7,500 per night with the 12% GST category to boost both domestic and inbound tourism.
Ease of Doing Business
To enhance competitiveness, he proposed a national e-single window clearance system for hotels and restaurants through the Hospitality Development Promotion Board.
Thomas Cook (India) Limited Executive Chairman suggested exempting Section 53 of GST for travel agents, which would not cause any revenue loss since airlines already discharge tax on their sales. He also recommended lowering the Tax Collected at Source (TCS) to 1% or standardizing it at 5% on foreign travel packages, against the current 5% and 20% slabs.
By addressing these issues, the tourism industry believes it can significantly boost domestic and inbound tourism, contributing to the country’s economic growth.
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