Kerala Travel Mart appeals to Jaitley to reduce GST on hotels to 18%

KTM said higher tax rates would stifle the tourism business, making it unsustainable

Kerala Travel Mart, a leading tourism body in Kerala, has expressed concern over high taxation rates under the new GST regime, saying it would "stifle" the tourism business in the country by making it unsustainable and drive away foreign tourists to destinations other than India.

A KTM delegation had recently met Union Tourism Minister Mahesh Sharma, Tourism Secretary Rashmi Sharma, GST Council Chairperson and officials of the Finance ministry and GST Council at New Delhi.

The delegation led by KTM president Abraham George along with K V Thomas, MP, drew their attention to the "serious anomalies" in the GST, which would throw the tourism industry into a major crisis, a KTM release said here today.

The delegation included Riaz Ahmed, past president of KTM and Jobin Jose, who represented the houseboat industry.

"The high incidences of taxes will make India uncompetitive when it comes to tourism as international tourists will skip the country as a destination. There is almost a 19 per cent tax hike for an Indian product after the implementation of GST. The Centre should address the issue urgently," Abraham said.

The industry has already been reeling under the impact of demonetisation and liquor ban on highways, he said, adding that implementation of GST has also started adversely impacting the business.

KTM has also submitted a memorandum to Finance minister Arun Jaitley, pointing out that that "the new GST structure is the highest in the world and is seriously affecting the sustainability of tourism business."

In the memorandum, the KTM president appealed to the Centre to reduce the tax for hotels from 28 per cent to 18 per cent, substantially bring down the tax on houseboats and declare tax holiday for inbound travellers. In the pre-GST regime, hotels were charging 19 per cent tax on rooms.

Making a strong case for rectification of tax anomalies, he said the tax has been to the tune of 38 per cent on tour packages for domestic travellers and 33 per cent for inbound international tourists clubbing the hotel tax with tour operators.

"The high tax of 28 per cent plus the tour operator's tax of five per cent is costing a foreign traveller hotel tariff of 33 per cent whereas the average tax rate in foreign countries is between 7 per cent and 17 per cent," Abraham pointed out.

The KTM, which has members from hotels, resorts, houseboats, home stays and tour operators, also demanded bringing down the GST on houseboats from 28 per cent to earlier tax rate of five per cent.

Inclusion of tourism in 'Make In India' scheme, tax holiday for inbound travellers and input credit to tour operators were the other demands raised by KTM in the memorandum.