Industry lauds GST Council's move to slash tax rates for hotels

NEW DELHI: The hospitality industry has welcomed the GST council's move to slash tax rates for hotels.
The GST Council on Friday approved the proposal to reduce tax rates on hotels, which had been a long standing demand of the industry.

The move to reduce the tax from 28% to 18% for hotels was particularly lauded. Earlier, the council had taxed hotels with tariffs of Rs 7500 and above at 28% which has now been brought down to 18%. Industry experts had said the 28% tax slab made Indian hotels among the most taxed in the world.

"The GST rate rationalization for Hotels is an extremely positive development which augurs very well for the Indian tourism industry. We are grateful to the finance minister for having considered this demand of the industry which is bound to create a good sentiment across travel, trade and hotels", said Dipak Haksar, chairman CII National Committee on Tourism & Hospitality and chief executive for ITC Hotels and Welcom Hotels.

Hotels between Rs 1001 to Rs 7500 will attract a tax of 12%. Hotels with tariffs of under Rs 1000 do not attract a tax as decided previously.

Abhishek Jain, tax partner at EY said the rate rationalization for the hotel industry in general should bolster demand for this sector. "With the upcoming vacation and festive season, this was a much sought for relief by this industry especially for the premium segment hotels," he said.

Sanjay Sethi, MD and CEO of Chalet Hotels said the tax cut will give a major fillip to the hospitality and tourism industry and make India's hotels more competitive globally. "For companies like Chalet, reduced taxation helps us focus our efforts on key aspects like fresh investments in portfolio expansion, job creation and creating sustainable green hotels," he added.

Gurbaxish Singh Kohli, vice president of apex industry association FHRAI said the industry had been lobbying for the tax reduction for luxury hotels for a while.

Nakul Anand, chairman of industry association FAITH said the news on GST rationalization comes as a big shot in the arm for the tourism industry.

"All ten member bodies of FAITH have worked tirelessly towards this endeavor and on behalf of FAITH, we would like to thank the government for making this happen. This adds great spurt and momentum to the hospitality industry and creates a positive sentiment that ensures more vigour and strength for destination India," he added.

Vivek Bhalla, regional VP, IHG, SWA said it is a positive move which should help improve the market’s sentiment overall. "With the festive and holiday season around the corner, the timing could not have been better," he added.