Budget 2024: The travel and tourism sector has asked the government to take into account a uniform 12% hotel GST rate in the next Budget for 2024–2025 in order to increase both local and inbound tourism. On July 23, Union Finance Minister Nirmala Sitharaman is expected to deliver the 2024–25 budget to the Lok Sabha.
The current GST rates for hospitality are among the highest globally, making tourism expensive.
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Will help simplify compliance processes
As per the expert who stated that a uniform GST rate will make compliance procedures easier.
“Since hotels modify room rates in response to demand and high season rates, the tiered GST based on hotel room tariffs may result in price differences. For instance, an overnight stay for Rs 10,000 is subject to 18% GST, whereas an off-season rate of Rs 7,000 is subject to 12 percent GST. We implore the finance minister to take into account in the Union Budget for FY25 a uniform 12 percent GST rate for hotels. The compliance procedures will become simpler as a result,” he stated.
He recommended that the differences that exist in the domestic market between e-commerce suppliers and operators be eliminated by the government. For instance, when a consumer books a non-AC bus through an e-commerce platform, they are currently required to pay a 5% GST (goods and services tax) charge. Whether a direct reservation is made online or offline, there is no fee associated with it, the bus operator stated.
In addition, He stated that tax breaks for lodging establishments and homestays that embrace sustainable practices are consistent with India’s commitment to the Sustainable Development Goals of the United Nations, particularly SDGs 13 (Climate Action) and 11 (Sustainable Cities and Communities).
“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 stated.
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Highest global GST rates now apply to hospitality
An expert emphasized the need to prioritize the tourist and hospitality industries, which account for 10% of India’s GDP. “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 stated.
He added that one reason the cost of travel has increased is because the hospitality industry currently has some of the highest GST rates in the world. “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,” he stated.
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He emphasized the importance of simplicity of doing business and argued in favor of the Hospitality Development Promotion Board’s nationwide e-single window approval system for lodging establishments. He thinks this can increase industry competitiveness and significantly reduce expenses.
Executive Chairman of Thomas Cook (India) Limited, which includes Thomas Cook, SOTC, Sterling Holidays, and TCI, Madhavan Menon proposed exempting travel agents from Section 53 of the GST. The government won’t lose any money as a result because airlines already pay taxes on sales. Additionally, we would advise reducing TCS (Tax Collected at Source) to 1%. If not, he suggested standardizing the tax rate on international travel packages to 5% (as opposed to the present slab rates of 5% and 20%).
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