India’s GST Council last Friday announced a GST rate cut on hotel rooms, bringing a much-welcomed relief to industry stakeholders who have long voiced their concerns of the impacts of high GST rates on the competitiveness of the country’s tourism and hospitality sectors.
With the new move, the tax on room tariffs of Rs7,500 (US$105) and above is now cut from 28 per cent to 18 per cent. Similarly, the tax on room tariffs of less than Rs7,500 is slashed from 18 per cent to 12 per cent.
The Federation of Hotel & Restaurant Associations of India (FHRAI) anticipates the move will give a boost to the tourism and hospitality sector during the upcoming festive and holiday season, said vice president Gurbaxish Singh Kohli.
“The reduction in the GST rates will make India an attractive tourism destination to foreign as well as domestic tourists who presently choose to vacation in the neighbouring countries on account of price competitiveness,” he stated.
Also lauding the move is president of the Hotel and Restaurant Association of Northern India (HRANI), Surendra Kumar Jaiswal, who is positive that the reduction of tax rates on hotel room tariffs should help in lifting market sentiments.
Likewise, Sarbendra Sarkar, managing director and founder, Cygnett Hotels & Resorts, said: “This move will help travellers gain more out of their dispensable budget, luring them to travel more. Moreover, this would also help the industry receive the traction that was not evident since the past few months. It will certainly boost the average occupancy of hotels.”
He added: “Additionally, it will also help us propel our value proposition at a competitive price point that we are operating in.”