Friday, August 19, 2022

Travel trade & hospitality industry speak out on GST hike on hotel room rates

“We were looking at the government to do away with taxes and extend support to our industry which is yet to revive from the long crisis.”
— Jyoti Mayal, TAA
I

The Travel Agents Association of India (TAAI) is not happy with the recent ruling of the GST Council that has increased the tax on hotel room rates, reported ETTravelWorld. In a letter to the Union Finance Minister, TAAI has criticised the move of increasing the tax on hotel room rates below INR 1,000 to 12 per cent from 5 per cent. Jyoti Mayal, TAAI said that the travel trade and the hospitality industry will have to face the consequences of the GST ruling. “We were looking at the government to do away with taxes and extend support to our industry which is yet to revive from the long crisis. However, with the increase, travel trade and hospitality will have to face the brunt majorly. Imposing 12 per cent GST on hotels priced below INR 1000 is the biggest jolt to both travel and hospitality industry. Hospitality offered below INR 1000 drives the system and an increase at that level will take employment and business opportunities from many,” Mayal said.

Jay Bhatia, Vice President, TAAI pointed out the increase taxes on cheque payments from Nil to 18 per cent. “We the people in the travel industry work at the grass-root level. And, till today, in Tier II and III cities the preferred mode of payment is by a financial instrument like cheque. An increase in taxation of making and receiving payments will add a burden on both the agent and traveller, which may perhaps push travellers to move away from registered and legitimate agents to illegal business operators which is a matter to worry,” Bhatia said.

TAAI also pointed out that the long pending request to permit Input Tax Credits for Tour Operators booking hotels in other states vide, IGST, still remained

There has also been an increase — from 12 per cent to 18 per cent — on items like printing, spoons, forks, machines for cleaning eggs, fruits and other products. Bettaiah Lokesh, Hon. Secretary-General, TAAI said that the hike in tax on these items would lead to an increase in serving and servicing the end product. “We do agree that there are a few points which are appreciable like exemption on the transport of passengers by air to and from NE states, renting of truck/ goods carriage etc. However, overall recommendations made give the impression of increasing taxation burden on the businesses exorbitantly,” he said.

TAAI also pointed out that the long pending request to permit Input Tax Credits for Tour Operators booking hotels in other states vide, IGST, still remained. “To our understanding, GST was introduced to have uniform taxation and easy filing, and in addition, to have a better understanding for both service provider and receiver regarding the taxation’s slabs. However, the increase and introduction of a tax on items directly related to travel trade and tourism, we see it as a negative sentiment spreading in the businesses,” said Shreeram Patel, Hon. Treasurer, TAAI.

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Tarkeshwar Singh
(Tarkeshwar Singh is an Admin and Facility Management professional with several years of experience in the hospitality sector in India and abroad. His core area is consultancy in the management of facilities.)

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