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Friday, 07 July, 2017, 17 : 42 PM [IST]

Hoteliers fear flight of corporate MICE business out of India under GST

Industry demands clarity in language of the GST notification
The Indian hoteliers are apprehensive of loss of corporate MICE business as GST doesn’t allow hotels to give IGST credits to corporate companies holding events, conferences, incentive groups in their hotels. Under the present provisions of service, hotels are not entitled to give IGST credits to corporate companies which are not registered in the destination, an expert in the matter told Hospitality Biz. Since small businesses cannot afford to get registered in all states, hotels cannot issue IGST credits to such clients and companies.
 
“If there are no incentives for doing events in India, these businesses will automatically take their meetings, conferences, incentive groups, etc. to other destinations. Therefore, IGST should be allowed for hotels, that is a key demand of the industry,” he said.

In one of the GST workshops organised by Hotel and Restaurant Association of Northern India (HRANI), hoteliers demanded more “clarity in the language” of the notification. Hoteliers have raised the issue of ‘Declared tariff’ which is redundant as most of the hotels work on a ‘dynamic pricing’ system driven by the market forces. There is also lack of clarity whether 5-star classification or the threshold of INR 7,500 which applies for 28% GST. Ashish Gupta, Consulting CEO of FAITH who raised the queries on behalf of the industry in the presence of Rashmi Verma, Secretary – Tourism, Government of India, and Sungita Sharma, Principal Additional Director General (Vigilance), Central Board of Customs & Excise (CBCE), said that language needed to be simplified to avoid harassment by the local officials at a later stage and to avoid scope for long drawn litigation.

Speaking on the occasion, Verma said that it is a misconception that rates have gone up under GST. Rather tax incidence on the industry has come down to 18% from 20%, she said.  However, he conceded that our tax structure is way higher compared to our destinations like Thailand, Singapore, etc. “We will continue to take the concerns of the industry with the Ministry of Finance,” she said.

Sharma asked the industry to raise as many FAQs as possible within the next one week, which can be directed to law committee of the GST and further to GST Council and get the necessary redressal and clarification at the earliest.   

 
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