High GST on hotels may impact foreign tourist arrivals in Rajasthan
The high rate of Goods and Services Tax (GST) on hotels will have an adverse impact on the flow of foreign tourists to Rajasthan, tourism industry experts have saidjaipur Updated: May 25, 2017 20:17 IST
The high rate of Goods and Services Tax (GST) on hotels will have an adverse impact on the flow of foreign tourists to Rajasthan, tourism industry experts have said.
Under the new GST regime, hotels that charge over ₹5,000 a night have come under the highest tax bracket of 28%. In addition, tour operators have to pay 5% tax for bookings made under tour packages.
Rajasthan accounts for about 12 lakh foreign tourists every year, which is a large chunk of the total number of foreigners who visit the country.
“Post GST, we will lose our competitiveness in the region and the tourists will prefer other destinations like Sri Lanka and Singapore,” Rajasthan Association of Tour Operators president Khalid Khan told HT. “Taxes have been hiked from 18% to 28% and after including taxes on tour packages, it comes to be 33%, which is a steep hike from the earlier 23%,” he said.
In Rajasthan, there are a number of heritage and luxury properties that charge more than ₹5,000 per night. Khan said that in the October-December season, there are hardly any good hotels that charge less than ₹5,000 per night.
“It (higher taxes) will kill the tourism sector,” Indian Heritage Hotels Association general secretary Randhir Vikram Singh said. “It’s a price sensitive sector and now tourists will prefer other destinations such as Sri Lanka and Maldives,” he said.
The new tax slab will also raise the bills in restaurants that have air conditioning and serve alcohol.
The hotel industry now plans to approach the Union government to urge it to reconsider the move. “We will approach the government through IATO (Indian Association of Tour Operators) and hope that the government will understand our plight,” he said.
“For India, charging 28% tax is just not globally competitive when nations like France charge 5.5%,” Singh said.
As per industry figures, the tourism sector employs nearly 37 million people directly and indirectly and generates an annual revenue of about ₹14 lakh crore.
The GST council has pegged GST for AC eateries and those with a liquor licence at 18%, non-air-conditioned restaurants at 12%, hotels charging room rentals between ₹1,000 and ₹2,500 at 12%, ₹2,500 and ₹5,000 at 18% and above ₹5,000 at 28%.