GST Rate for Hotels: Travel Industry Urges Uniform 12% in Budget

Mumbai, Jul 10 (PTI) The travel and tourism industry on Wednesday urged the government to consider a uniform 12 per cent GST rate on hotels in the upcoming Budget for 2024-2025 to boost domestic and inbound tourism.

"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 Union Budget FY25. This will help simplify the compliance processes," online travel services provider MakeMyTrip co-founder and Group CEO Rajesh Magow said.

He said the government should remove 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 stated that tax incentives for hotels and homestays for adopting sustainable practices align with India's commitment to the United Nations Sustainable Development Goals, particularly 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.

Hotel And Restaurant Association (Western India) president Pradeep Shetty said the association believes that tourism and hospitality, accounting for around 10 per cent of India's GDP, should be declared 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 said the current GST rates for hospitality are among the highest globally, making tourism expensive.

"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 said ease of doing business is essential, therefore, a national e-single window clearance system for hotels and restaurants through the Hospitality Development Promotion Board can significantly reduce costs and improve competitiveness.

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.