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TAAI expresses its displeasure on GST hike on hotel rooms

Be it the travel trade or many other allied and associated industries like hospitality were expecting a decline or perhaps a better GST taxation system in place, as an outcome of the 47th GST Council meeting held in Chandigarh on 29th June 2022. However, recommendations made to the Government by GoM on rate rationalisation came as a surprise to the various industries, including travel trade and tourism. Post going through the worst crises ever in human history, now when the industry is reviving, a sudden increase in tax slabs is the biggest deterrent to the growth, eventually leading to discourage the tourism fraternity.

In a letter addressed to the Hon’ble Minister of Finance, Government of India; Jyoti Mayal, President, TAAI, submitted the frustration and conveyed that we were looking at the government to do away with taxes and extend support to our industry which is yet to revive from the long crises. However, with the increase, travel trade and hospitality will have to face the brunt majorly. Imposing 12% GST on hotels priced below INR 1000 is the biggest jolt to both travel and hospitality industry. Hospitality offered below INR 1000 drives the system and an increase at that level will take employment and business opportunities from many, Mayal added.

Jay Bhatia, Vice President specifically pointed out the increase in cheque payments from Nil to 18%. He said, “we the people in the travel industry work at the grass-root level. And, till today, in tier II and III cities the preferred mode of payment by a financial instrument like cheque. An increase in taxation of making and receiving payments will add a burden on both the agent and traveller, which may perhaps push travellers to move away from registered and legitimate agents to illegal business operators which is a matter to worry,”

Referring to the increase from 12% to 18% on items such as Printing, Spoons, Forks, Machines for cleaning eggs, fruits and other products. Bettaiah Lokesh, Hon. Secretary-General said that the hike in taxation on such items would certainly lead to the increase in serving and servicing the end product. “We do agree that there are a few points which are appreciable like Exemption on the transport of passengers by air to and from NE states, renting of truck/ goods carriage etc. However, overall recommendations made give the impression of increasing taxation burden on the businesses exorbitantly,” shared Lokesh.

Further to TAAI’s long pending request to permit Input Tax Credits for Tour Operators booking hotels in other states vide, IGST, still remains unresolved at Government’s level at the GST Council. “To our understanding, GST was introduced to have uniform taxation and easy filing, and in addition, to have a better understanding for both service provider and receiver regarding the taxation’s slabs. However, the increase and introduction of a tax on items directly related to travel trade and tourism, we see it as a negative sentiment spreading in the businesses, highlighted,” Shreeram Patel, Hon. Treasurer.

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