You are here: Home » Economy & Policy » News » GST
Business Standard

GST: Tourism industry rues high rates, says this could be its death knell

5-star hotels will be charged 28%; AC restaurants and those with liquor licence will be taxed at 18%

Press Trust of India  |  New Delhi 

At present, taxes on small hotels are capped and most do not have to pay any service tax or luxury tax
At present, taxes on small hotels are capped and most do not have to pay any service tax or luxury tax.

High rates on will be the "final nail" in the coffin for the sector which is already reeling under demonetisation and liquor ban along the highways, according to industry players.

The high incidences of taxes will make uncompetitive when it comes to as international tourists will skip the country as a destination, they said.

Under the rates announced on Friday, 5-star will be charged 28 per cent while AC restaurants and those with liquor licence will be taxed at 18 per cent.

"The initial reaction is of great despair...28 per cent would be the end of the industry," Federation of and Restaurants Associations of (FHRAI) Vice President Garish Oberoi said in a statement.

He further said India's has already been suffering a lot due to various developments in the recent past.

"(After) demonetisation, liquor ban on highways, this will be the final nail in the (sector) coffin," Oberoi said.

Expressing similar sentiment, Hotel and Restaurant Association of Western (HRAWI) past-President Bharat Malkani said: "One of the biggest hurdles for Indian and tourism, in terms of attracting international tourists is its uncompetitive structure".

The government should realise countries like Myanmar, Thailand, Singapore, Indonesia and others levy taxes ranging from 5 to 10 per cent. cannot afford to have these kind of complex and high GST, HRAWI President Dilip Datwani said.

"This is simply not viable. Tourists will simply skip India," he added.

As per rates fixed by the Council in its meeting held on Firday at Srinagar, non-AC restaurants will charge 12 per cent on food bill. Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition.

rate for AC restaurants and those with liquor licence will be 18 per cent.

and lodges charging per day tariff of Rs 1,000 will be exempt from Rate for with tariff of Rs 1,000 to 2,000 per day would be 12 per cent while those with tariff of Rs 2,500 to Rs 5,000 would be 18 per cent.

for with tariff above Rs 5,000 will be 28 per cent.

"While we applaud the government's effort to keep at 5 per cent for restaurants below 50 lacs and 12 per cent for restaurants without AC. We are disappointed with the high slab of 18 per cent for organised restaurants and 28 per cent for 5 star restaurants. This will not go a long way to promote and related jobs", National Restaurant Association of (NRAI) President Riyaaz Amlani said.

Striking a contrarian note, OYO Founder & CEO Ritesh Agarwal said: "A lower rate for budget sector will ensure that the industry's quality upgrade continues while delivering standardised accommodation to millions of middle- class travellers.

RECOMMENDED FOR YOU