The recent news of the Lok Sabha passing the Goods and Services Tax (GST) Bill has come as a pleasant announcement to the Indian hospitality industry after the Union Budget 2015 gave it a miss. The hospitality industry is positive that the tax regime will help reduce multiple taxation, giving a significant boost to the hospitality and tourism industry, but has also sounded a word of caution. Bharat Malkani, president, Hotel and Restaurant Association (Western India) stated, “The GST is supposed to replace both service tax and luxury tax as hotels are presently suffering from multiplicity of taxation. But inorder for us to be globally competitive, the new tax rate must be maintained under 10 per cent in the hospitality industry. Failure to do which, we will continue to suffer due to high taxation. For instance, in Malaysia, Singapore, Dubai, the taxes are under 10 per cent. While the offerings are similar, the taxes are lower. Though the passing of the GST Bill is a step in the right direction but if it is at a high percentage of what we are facing today, it is not going to have any positive impact on the industry. We expect the goverment to understand that tourism is a globally competitive business.” GST, which is proposed to be implemented from April 1, 2016, will subsume excise, service tax, state VAT, entry tax, octroi and other state levies.
Similarly, the tourism industry though optimistic about the passing of the GST Bill in the Lok Sabha, also expressed its concern. Subhash Goyal, president, IATO added, “I think this is a historical step and it will definitely benefit not only the tourism industry but also the entire services industry all over the country. I hope that the opposition parties in Rajya Sabha will not oppose this for the sake of opposing and look at it with a very open mind and clear cut objective.” Speaking on this move, Rajeev Wagle, MD, Kuoni India, said, “It is a very good step that the government has taken. I hope it gets passed in the Rajya Sabha as smoothly. All those countries that have adapted GST have grown their GDP. Specifically for the travel industry, we need to be a little clear as how it will work out. I think all industries should benefit from this announcement. However it should be clear of bureaucratic bottlenecks.”
Source : Financial Express