‘Give boost to hospitality, tourism through ‘Input Tax Credit’ benefits’

Source: The Hitavada      Date: 31 Aug 2018 09:54:14



Business Bureau

During the 23rd meeting of GST Council held in Guwahati recently; the Government announced reduction in Goods and Services Tax (GST) levied on food bills at restaurants to 5 per cent; excluding the ‘Input Tax Credit benefits’. Initially the tax rate for eating out at restaurants was at 18 per cent. Now it has come down to 5 per cent but it is sans ‘Input Tax Credit’.

The exception is restaurants in hotels with room tariff of Rs 7,500 or above will continue to pay GST at the rate of 18 per cent and receive ‘Input Tax Credit’. Hotels and restaurants owners welcomed the decision of uniform GST rate for all eateries across the country, but the non- availability of ‘Input Tax Credit’ is a big issue for enterprises since they can no longer claim set off expenditures on capital investments and rentals that is a huge amount especially in big cities. The high GST rate of 18 per cent continues to remain a concern, as rates applicable for hotel stay in India are expensive for both domestic and international tourists. It is expected that this will badly affect the tourism sector and eventually the economy of the country. Tourists prefer travelling neighboring countries such as Sri Lanka; Bhutan or even Thailand to India because these countries have lower taxes as compared to India. There is another major issue for hospitality industry - MICE tourism (meetings; incentives; conference exhibitions.) is badly getting affected as the ‘Input Tax Credit’ benefit is not available for corporate sector. The corporates are considering conducting their MICE activities in the neighboring countries on account of both lower taxes and tax credit benefit.

The biggest worry is losing inbound tourism because of high tax rate and unavailability of tax credit benefit. Almost one year has passed since the Government launched the GST; but the hotel industry continues to cite some concerns due to the tax structure framed by the Government, informs a press release by Dr Anil Sharma,
Secretary of NCCL.