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Lowering of GST on Hotel Industry will Boost Tourism in India

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Lowering of GST on Hotel Industry will Boost Tourism in India (2)

On 20th September, the GST Council Meeting held in Goa, led by Nirmala Sitharaman, Finance Minister announced to lower the tax rates imposed on hotel industry of India. It is a big step towards boosting tourism in India. The GST relief in the tourism and hospitality sector has brought down the cap from 28% to 18%.

According to the GST amendments applicable on hotel tariffs from 1 October 2019, the hotel rooms with tariff less than INR 1000 (USD 14.10) will not be charged with any GST. Hotels with room tariff between INR 1000 ($14.10) to INR 7500 ($105.77) for a night, will be applied with 12% GST which was 18% earlier. The GST value on hotel rooms above INR 7500 (INR 105.77) has been brought down to 18% from current 28%.

The decision has been supported by the India travel and tourism industry assuring increased number of foreign tourists in the country in the upcoming year. Soon, tourists are likely to look for cheap flights to India from USA and other major countries as the accommodation charges comes down to a reasonable amount.

The GST Council has also made a few amendments for the slab applied on the outdoor catering institutions with daily rates above INR 7500, lowering it to 5% from the existing 18% excluding the option to avail input tax credit. On the other hand, indoor catering establishments remains unchanged at 18% including input tax credit.

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