29.07.2022: Hotel Association asks for GST rationalisation

The Federation of Associations in Indian Tourism & Hospitality (FAITH), a policy federation of all ten associations representing tourism, travel and hospitality industries has asked for five rationalisation measures for its sectors. It said restaurants should also be allowed the option of charging GST at 12% with full input tax credits and the rate should be delinked from any room tariffs if they are part of hotels. 

The body which represents organizations like – ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI & TAFI — has asked that hotels be allowed to charge IGST to enable seamless availability of credit across India to all travel agents and tour operators to build a sustainable business out of the domestic holiday segment, meetings and conventions in India.

It also said tour operators should be enabled a special presumptive GST rate of 1.8% with full GST setoffs. The current rate of 5% without setoffs structurally implies that tour operators have an inbuilt margin of around 27.8% which is an inherently flawed assumption of the prevailing business models. This, by default, creates an inherent linkage to value addition only and prevents a tax on tax, it said.

It added that travel agents should also be allowed the option of exploring the reseller model for charging as they are distribution arms for airlines. This option will enable travel agents to structure optimal partnerships as per their business requirements between their clients and their airline partners. 

The association said tourist transporters should be allowed the provision for availing GST setoffs on interstate tourist transport taxes, taxes on parking fees and on taxes on fuel which is their biggest input costs. 

The body mentioned that Indian tourism has an immense inherent potential to create up to 10 crore jobs over the long-term period, triple its GDP contribution and create forex earnings upto $ 75-100 billion and GST is a key enabler for creating this global and domestic competitiveness in tourism directly and through its indirect impact. 

Source: LiveMint


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