The Association has termed the rates too complex, high and uncompetitive and said it will make a representation to the Finance and Tourism Ministers for a review of the rates.

THE HOSPITALITY industry has expressed disappointment over the GST rates for hotels and restaurants. The GST council in its meeting held today at Srinagar has pegged GST for AC eateries and those with liquor licence at 18 per cent, non-air-conditioned restaurants at 12 per cent, hotels charging room rentals between Rs.1000 and Rs.2500 at 12 per cent, Rs.2500 and Rs.5000 at 18 per cent and above Rs.5000/- at 28 per cent. Terming the rates as too complex, high and uncompetitive, the hotel industry has declared that it will make representation to the Finance Minister and Tourism Minister to review the rates once again.

“The Government should realise that while neighbouring countries like Myanmar, Thailand, Singapore, Indonesia and others levy taxes ranging from 5 to 10 per cent, we cannot afford to have these kind of complex and high GST. This is simply not viable. Tourists will simply skip India,” says Dilip Datwani, President, Hotel and Restaurant Association of Western India (HRAWI).

Being the backbone of the tourism industry, it was expecting to be placed in the 5 per cent slab.

“One of the biggest hurdles for Indian hospitality and tourism, in terms of attracting international tourists is its uncompetitive tax structure. A country as small as Singapore witnesses 10.90 million tourists against 6.31 million for India. Nations like Malaysia and Thailand attracted 24.7 million and 19.09 million tourists in 2014 and earned foreign exchange of USD 18,299 million and USD 26,256 million. In contrast, India managed to earn a meagre USD 94 million,” says Bharat Malkani, past President, HRAWI.

“Hospitality is not only one of the highest foreign exchange grossers, but also one of the largest tax generators for the exchequer. It is also one of the highest employment generating industries, employing a large number of youth in the country and 70 per cent of India’s population is below the age of 35 years. This section of the population too will definitely be affected adversely. By the Prime Minister’s own declarations, the growth of the nation will parallel the growth of tourism. So, it is perplexing that the industry is being taxed to death. If GST is not reconsidered, foreign exchange inflow will dry up sooner than later,” says Gurbaxish Singh Kohli, Sr. Vice President, HRAWI.

“By rationalising taxes, India can easily quadruple its tourism revenues, and in absolute terms earn more money for the exchequer. The decision to place hotels in the 18 per cent slab may not be in the best interest of tourism in the country and the industry feels dejected,” concludes Datwani.