Goa tourism body seeks rollback of GST hike on budget hotels

The Travel and Tourism Association of Goa (TTAG), an industry lobby of Goa’s tourism related businesses said the hike will adversely affect their businesses

Goa’s tourism body on Wednesday called for a rollback on the hike in GST (Goods and Services Tax) rate for small and medium hotels, saying it will make them uncompetitive and lead to increase in compliance costs.

Restaurants within hotels should not be levied a GST rate of 5%, the body said. (File image)

The Travel and Tourism Association of Goa (TTAG), an industry lobby of Goa’s tourism related businesses said the hike will adversely affect their businesses.

“More than 60% (around 2,170 out of a total of 3,848 hotels approximately) of hotels in Goa, registered with the department of Tourism are small hotels with a tariff below ₹1,000 per night. This will affect them adversely and increase their compliance costs,” TTAG president Nilesh Shah, said.

Prior to the recent increase, hotels whose room rates were below ₹1,000 a night were exempted from levying GST with the rate standing at 0%. However, with effect from July 18, 2022, a GST rate of 12% will be levied on hotels with tariff below ₹1000 per night.

Restaurants within hotels should not be levied a GST rate of 5%, the same as standalone restaurants instead of linking it with the room tariff, Shah added.

“GST levied on restaurants in hotels is linked to the room tariff. Restaurants in hotels with a room tariff below ₹7500 have a GST of 5% without Input Tax Credit (ITC) and those with a tariff above ₹7500 have a GST of 18% levied with ITC. Hotels should have the option of choosing a GST rate of 5% on restaurant services without ITC or 18% with ITC irrespective of room tariff,” Shah said.

GST rate on restaurants currently stands at 5% for standalone restaurants.

Back in 2019, the GST council had reduced GST from 28% to 18% on hotel room tariffs of ₹7,500 and above per night and from 18% to 12% on hotel room tariffs between ₹1001 to ₹7,500 while tariffs for rooms below ₹1,000 a night were kept at 0%.

“GST Rates for hospitality in India are very high as compared to our Asian competitors where they are 6-8%. Indian states lose a significant number of foreign tourists due to this and will also lose domestic traffic in this segment,” the Travel and Tourism Association of Goa which had lobbied hard for the rate reduction, back in 2019, said.