Page 45 - English Tehelka Issue 1&2

hospitality

Prominent players in hospitality at a glance GST. Yatish Sood of Chalets Luxury
sector want ‘one industry one tax’ Resorts at Naldehra near Shimla
concept to make it more business The table below provides a glimpse is gearing up for better footfall this
friendly. About 30-35 per cent hotels of how the restaurant services (as year. The GST provides the avenue
in north region fall in the category per their yearly turnover) will now of input tax credit which is a huge
of Luxury Hotels. It is indeed a tight- be taxed under GST. relief. Corporate travellers can also
rope walk for them. Establishment Type and Services & reap the benefit of input tax credit
Sources at a leading luxury hotel GST Rate Applicable: and the tourists get rid of multiple
chain of India operating in Kash- • At establishments with turnover taxes like luxury tax, value added tax,
mir confirmed that even premium of <INR 75 lakh: 5% (Composition service tax, etc.
customers do not want to shell out Scheme) During the peak season, there is
so much on account of tax. They are • Non-AC restaurants not serving dearth of rooms in tourist destina-
expecting another year of lukewarm alcohol: 12% tions. According to data provided by
business. • Non-AC restaurants serving alcohol: the Hotel and Restaurant Associa-
The organised hospitality play- 18% tion of North India, the number of
ers also feel threatened by the • Restaurants with AC or Central rooms in the organised sector in the
mushrooming of bed and breakfast heating (whether serving or not states of Himachal Pradesh, Jammu
providers. While the GST has serving alcohol): 18% and Kashmir and Uttarakhand are
made the going tough for hotels, • Partly AC and partly non-AC 8,672. The number can be higher as
their competitors offering bed and restaurants (includes those serving there is a large number of hotels in
photo: tehelka archives
breakfast have become more and those not serving alcohol): 18% the unorganised sector too.
attractive and economically • AC Restaurants inside 5-Star Hotels:
The ministries of tourism at the
Hospitality and tourism viable for tourists. Though the en- 18% state level should act more pro-
tities providing bed and breakfast
actively to organise and improve
fall in the ambit of GST, the tariff
bottlenecks that impede the growth
sector in need of GST reform they charge is low. “A commercial facts & figures of tourism in the country. The devel-
establishment has to seek at least 20
opment of new tourist destinations
odd approvals and No-Objection
Certificates from different gov - The table below gives an understanding of GST can help de-congest the existing
spots which have now become over-
rates applicable to the hotel industry:
ernment authorities but bed and Room Tariff per night (INR) GST Applicable crowded. Massive traffic jams in hill
Hotels and restaurants are major contributors to the country’s GDP and their woes with breakfast providers are exempted < INR1000: 0% (no tax) stations turn a holiday into an ordeal
regard to GST implementation must be addressed by the government in the upcoming from all these approvals that saves INR >=1000 but < 2500: 12% and this causes inconvenience not
only for the revellers but irreparable
so much of time and money,” said
INR >=2500 but <7500:
18%
budget in order to boost the economy, komal amit gera writes Sanjay Sood, President of Hotel and >= INR 7500: 28% damage to the environment.
Restaurant Association of North Depending on this breakdown, budget hotels The intervention of the National
India. Sood expects better busi - are the ones to benefit the most from the Green Tribunal on the regulation of
he tourism industry in sentiments were at their ebb. tion. They have sought that the GST ness this time in comparison to last implementation of GST. traffic on the Manali-Rohtang road
India is hoping to get Things have streamlined one quantum of 28 per cent for hotels year as is indicated by the advance has helped to conserve the environ-
a major boost in the year after the currency shake-up be removed and GST be charged reservations this season but the ment and natural beauty of the re-
upcoming budget, but worries of the hospitality and on the transaction value instead rationalization of different slabs Hotel associations across India gion but the state governments need
expecting a spur in tourism sector are far from over. of declared tariff. FHRAI has also of GST is imperative to keep the have given representations to the to take steps in advance to protect
T investment and em- The rollout of GST regime has not requested the Government to con- momentum going. Finance Ministry to put a uniform the environment and offer alterna-
ployment for this sector. The tax gone down well with the industry. sider the fact that standalone res- Ajay Bakaya, Executive Director, tax rate of 12 per cent of GST. The ho- tives to tourists.
slabs carved out under the new GST Multiple rates of taxation, lack of taurants especially those located in Sarovar Hotels and Resorts is san- tel industry, as per a report by KPMG, The hospitality and tourism in-
regime need a revision and many clarity about new taxation slabs and commercial markets and malls pay guine over 8 per cent growth in rev- contributes towards 7.5 per cent dustry is India is expected to grow to
issues like incentives for invest- a very high tax rate for luxury hotels a large sum as rent for the premises; enue during April-December 2017. of Gross Domestic Product of the USD 280.5 billion by the year 2026.
ment in hospitality and tourism may dissuade travellers from choos- 18 per cent GST is charged on rental The rising aspirations of domestic country and has a projected growth On the flip side, the tax rates on ho-
and improvement of infrastructure ing their favourite destinations services. However, GST rate of 5 per travellers have helped maintain rate of about 16.1 per cent of CAGR. tels in other Asian Countries such as
are expected to be addressed by the or resorts. cent is applicable on their output buoyancy in the occupancy rates but According to sources, the govern- Singapore, Malaysia and Thailand
Finance Minister. The Federation of Hotels and services without granting any tax he too supports the need to amend ment is likely to further simplify and are in the range of 7-8 per cent. The
The players in hospitality sec- Restaurants Association of India credit. “Non-grant of credit on input the GST into simpler taxation and rationalise the GST rate for the hos- Indian hotel industry with the exist-
tor suffered a dent during the post- (FHRAI) has requested the GST services like rent is causing hardship merge different slabs into one. pitality sector considering its multi- ing tax rates has a long way to go to
demonetization period. Every year Council that to compete with neigh- to the business and increasing the The GST of 5 per cent on restau- plier effect on economic growth. match steps with its global peers.
has its own challenges but last year bouring countries and to make cost,” said Girish Oberoi, President rants has come as a big relief for the However, there is also a posi -
(year ending 2016) the industry’s India as a preferred tourism destina- of FHRAI. Food and Beverages sector. tive side to the implementation of letters@tehelka.com

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