NEW DELHI: Ahead of the GST Council meeting on May 28, associations representing the travel, tourism and hospitality industry have urged the government and the chief economic advisor to rationalise GST across the tourism value-chains in order to aid revival and recovery of the sector which has been severely impacted by the pandemic.
The federation of associations in Indian tourism and hospitality (FAITH) said the government must initiate the process of reviewing and rationalising GST applicable to the travel industry. It also suggested a slew of measures to revive India’s travel industry.
FAITH said hotels should be allowed to charge 12% GST with full set-offs, irrespective of tariff categories. This, they said, will ensure that the GST applicable on tariffs in Indian hotels becomes competitive not only in the immediate neighbourhood, but also globally. Most countries that promote tourism as a mainstay of their economy levy under 10% GST on tourism products.
A similar demand was also made for restaurants, saying they should be allowed to charge 12% GST with full input credit taxes and this should be delinked from room tariffs where they are part of hotels.
FAITH said hotels should also be permitted to charge Integrated GST to enable seamless availability of credit to all travel agents and tour operators, and that tour operators be enabled a special presumptive GST rate of 1.8% with full GST set-offs.
Batting for tour operators and travel agents, a segment badly hit due to travel restrictions in view of the pandemic, the industry body said the government should allow them the option of exploring the “reseller model” for charging customers since they are distribution arms for airlines.
FAITH also said implementation of GST-Tax Refund for Tourists (TRT) Scheme should extend to all tourism products and services in India. “This will prevent India from exporting its taxes on tourism and will increase our global competitiveness in world tourism,” FAITH said.
Emphasising the existential crises the pandemic presented for the tourism, travel and hospitality industry, it said the travel industry should be permitted to get refunds of unutilised GST credit sitting with states to meet their liquidity requirements.