Travel, hotel sectors seek clarity on tax rate under GST

MUMBAI: The travel, tourism and hospitality sectors have been eagerly awaiting the government’s decision on goods and services tax (GST) and the way it will get implemented in the country.

While finance minister Arun Jaitley has finalised the four-tier tax slabs, the industry players continue to look for more clarity on how positively or negatively GST will impact their respective businesses, reports DNA.

When contacted, executives from travel and hotel companies said they were not in a position to give a comment as precise details were not available to decipher the impact of GST on their operations.

According to taxation experts, the impact of GST on the tourism and hospitality sectors will completely depend on slabs under which the various services are being taxed.

For example, said Divyesh Lapsiwala, tax partner – GST, EY India, the tourism sector is taxed at around 30% of the tour value (i.e. an effective rate of 4.5% service tax is levied). “It will be important to understand how such services will fit in the rate structure. The industry was also hoping that the government will bring in the TOMS mechanism, also called tour operator’s margin scheme, which is practised in the developed markets,” he said.

However, there appears to be no clarity on TOMS mechanism getting introduced in India.


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