Mumbai: If you are planning to eat out in lavish restaurants and stay in luxurious hotels, be prepared to shell out more as the Good and Service Tax (GST) is being rolled out across the country.
Bills at non-AC restaurants will come with 12% GST which is the lowest in the slab while stays at posh hotels with room rentals above Rs 5,000 will attract 28% GST as they come under the highest slab.
The only good news is that room rentals of Rs 1,000 or less up to Rs 2,500 per day have been kept at 12% GST.
Unhappy with the decision, hotel industry captains are now planning to make representation before Union finance and tourism ministers to review the rates once again.
Under the new GST slabs announced on Friday, AC eateries and those with liquor licence are pegged at 18%; hotels charging room rentals between Rs 1,000 and Rs 2,500 will be placed at 12% while rents between Rs 2,500 and Rs 5,000 will be charged 18% and above Rs 5,000 will attract 28% GST.
The hotel association has termed the rates as “too complex, high and non-competitive”.
“The government should realise that neighbouring countries like Myanmar, Thailand, Singapore, Indonesia and others levy taxes ranging from 5% to 10%. We cannot afford to have this kind of complex and high GST. It is simply not viable. Tourists will simply skip India,” said Dilip Datwani, president of the Hotel and Restaurant Association of Western India (HRAWI).
He said the association was expecting the GST at 5 per cent which would be in line with the neighbouring countries.
“One of the biggest hurdles for the Indian hospitality and tourism sector, in terms of attracting international tourists, is its non-competitive tax structure. A country as small as Singapore witnesses 10.90 million tourists against 6.31 million for India. Countries like Malaysia and Thailand attracted 24.7 million and 19.09 million tourists in 2014 and earned foreign exchange to the tune of USD 18,299 million and USD 26,256 million. In contrast, India managed to earn a meagre USD 94 million,” said Bharat Malkani, past president of HRAWI.
Classification GST Rate
Non Air-conditioned Eatery 12%
Air-conditioned Eatery 18%
Eatery with liquor licence 18%
Hotels with room rental less than Rs.1000/- per day 0%
Hotels with room rental between Rs.1,000/- and Rs.2,500/- 12%
Hotels with room rental between Rs.2,500/- and Rs.5,000/- 18%
Hotels with room rental above Rs.5,000/- 28%
Industry captains speak
“Tourists will simply skip India because of the high taxes after GST.”
– Dilip Datwani, President HRAWI
“India had been losing out on tourist count.”
– Bharat Malkani, Past President HRAWI
India Malaysia Thailand Singapore
Tourist Arrivals 6.31 24.714 19.098 10.390
FOREX Gained 94 18,299 26,256 17,990
All figures in million.