Business Travel

Tourism ministry seeks lower GST for 5-star hotels

DELHI: The tourism ministry has proposed a reduction in the Goods and Services Tax (GST) rates for five-star hotels and the grant of ‘infrastructure status’ as part of measures to boost the vital jobs- and foreign exchange generating sector.

Providing land on lower lease rentals for hotel construction, cutting the number of permits needed to open hotels, as well as establishing a National Tourism Regulator and the related regulatory framework are some of the other proposals made by the ministry on Monday, October 23, reports The Hindu.

The aim is to ensure that within five years the sector generates 100 million jobs (from the current 43 million), attracts 40 million tourists (from 14.4 million now), and generates $100 billion worth of foreign exchange earnings (from about $24 billion at present).

The ministry has also set up four Joint Working Groups (JWGs) — one each on hospitality sector, start-ups, ‘MICE’ or ‘Meetings, Incentives, Conferences, and Events’-tourism, and niche tourism — to work on recommendations from the industry, and bring out an ‘Action Plan’ with specific targets and time lines to achieve them.

The JWGs would each have a representative from the tourism ministry, the Department of Industrial Policy and Promotion, industry, and the government’s investment facilitation and promotion wing ‘Invest India’. The JWGs would submit their suggestions within a month, with the Centre placing the recommendations in the public domain and also sharing regular Action Taken Reports.

Addressing reporters, tourism minister Alphons Kannanthanam said his ministry would soon moot the proposal for lowering GST rates on five star-hotels with the finance ministry. Currently, there is a 28% GST (the highest slab) on rooms with tariff (per room per day) above Rs. 7,500. According to the tourism industry, the 28% GST rate renders India uncompetitive, with foreign tourists opting to travel instead to neighbouring countries such as Thailand, Malaysia and Singapore where the tax rate on hotels was only 7% or lower.

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