Thursday, July 11, 2024
  1. You Are At:
  2. News
  3. Business
  4. Budget
  5. Budget 2024: Tourism industry seeks uniform 12 per cent GST rate on hotels

Budget 2024: Tourism industry seeks uniform 12 per cent GST rate on hotels

Budget 2024:The current GST rates for hospitality are among the highest globally, making tourism expensive.

Edited By: Arushi Jaiswal @JaiswalArushi Mumbai Updated on: July 11, 2024 8:40 IST
Budget 2024
Image Source : FREEPIK.COM Budget 2024

Budget 2024: To boost domestic and inbound tourism, the travel and tourism industry has requested the government to consider a uniform 12 per cent GST rate on hotels in the upcoming Budget for 2024-2025. Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget for 2024-25 in the Lok Sabha on July 23. 

'Will help simplify compliance processes'

Online travel services provider MakeMyTrip co-founder and Group CEO Rajesh Magow said that a uniform GST rate will help simplify the compliance processes.

"The tiered GST based on hotel room tariffs can lead to price disparities as hotels adjust room rates based on demand and peak season rates. For example, a room night costing Rs 10,000 falls under the 18 per cent GST rate, while an off-season rate of Rs 7,000 falls under the 12 per cent GST rate. We urge the finance minister to consider a uniform GST rate of 12 per cent on hotels in the Union Budget FY25. This will help simplify the compliance processes," Magow said.

He suggested that the government should eliminate the disparities between e-commerce operators and e-commerce suppliers in the domestic market. "For example, currently, a customer pays a 5 per cent GST (goods and services tax) charge when booking a non-AC bus through an e-commerce platform. This charge is zero for a direct booking from a bus operator, irrespective of whether it is done in online or offline mode," he added.

Magow further said that providing tax incentives for hotels and homestays that adopt sustainable practices aligns with India's commitment to the United Nations Sustainable Development Goals, specifically SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action).

"By offering tax incentives that promote eco-friendly measures in the tourism sector, such as energy-efficient lighting, water-saving devices, and waste-reduction practices, the finance minister will be encouraging the industry to contribute to these global goals," he added.

Current GST rates for hospitality highest globally

Hotel And Restaurant Association (Western India) president Pradeep Shetty emphasised that tourism and hospitality, which constitute approximately 10 per cent of India's GDP, should be designated as a priority sector. "Granting infrastructure status to hotels and convention centres of project cost of Rs 10 crore and above is essential for attracting investments and accelerating growth in the hospitality sector," he added.

He further commented that the current GST rates for hospitality are among the highest globally, contributing to the increased cost of tourism. "We urge the abolition of the 18 per cent GST category for hotels with room rates above Rs 7,500 per night, merging it with the 12 per cent GST category to boost both domestic and inbound tourism," Shetty noted.

Shetty emphasised that ease of doing business is crucial, advocating for a national e-single window clearance system for hotels and restaurants through the Hospitality Development Promotion Board. This, he believes, can substantially cut costs and enhance competitiveness in the sector.

Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays and TCI) Executive Chairman Madhavan Menon suggested exemption of Section 53 of GST for travel agents. "This will not cause any revenue loss for the government, as airlines are already discharging tax on their sale. We would also recommend lowering TCS (Tax Collected at Source) to 1 per cent. If not, a standardisation at 5 per cent on foreign travel packages (against the current 5 per cent and 20 per cent slabs)," he said.

(With PTI inputs)

Also Read: Union Budget 2024: PM Modi to meet prominent economists today to gather their views and suggestions

Also Read: Budget 2024: Govt may double minimum guaranteed amount under Atal Pension Yojana



Read all the Breaking News Live on and Get Latest English News & Updates from Business and Budget Section