GST & Hospitality Industry: A brief Analysis

Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. With the increase in tourism hospitality industry has the vital role to attract the foreign tourist. With the implementation of GST, it is important to know the provisions that will affect the hotel industry.

Pre & Post GST Scenario of Hospitality Industry:

The hospitality industry, like every other sector in the Indian economy, was liable to pay multiple taxes (VAT, luxury tax, and service tax) under the previous VAT regime. Under the Goods and Service Tax, the hospitality sector will get benefits of standardised and uniform tax rates, and easy and better utilisation of input tax credit. 

GST Rates for the Industry:      

     A)   If Tariff per Night is less than One Thousand Rupees (< 1000)    

No GST

     B)   If Tariff per Night is more than One Thousand but less than Two Thousand five Hundred Rupees (1000-2500)   

GST @ 12%

   C)   If Tariff per Night is more than Two Thousand five Hundred and but less than Seven Thousand five Hundred Rupees (2500-7500)    

GST @ 18%

     D)   If Tariff per Night is more than Seven Thousand five Hundred Rupees (>7500) 

  

GST @ 28%

Impact of GST on Hospitality Industry:

The cascading effect will not be there under GST regime & Input Tax Credit will also be available, so it will reduce the end cost. As the final cost to end user decreases, we can expect the industry to attract more overseas tourists than before. This would ideally result in improved revenues for the government, and there are many pros to this new tax regime which could help the industry’s growth in the long run.