Eighteen per cent GST for eateries with air-conditioning, liquor permit

Following the Goods and Service Tax (GST) Council’s recent meeting in Srinagar, where the levy on eateries with air-conditioning and a liquor licence was pegged at 18 per cent, the hospitality industry has expressed its disappointment.

Eighteen per cent GST for eateries with air-conditioning, liquor permit

The GST levied on-air-conditioned restaurants was pegged at 12 per cent; the GST on hotels charging room rentals between Rs 1,000 and Rs 2,500 was pegged at at 12 per cent, the GST on those charging room rentals between Rs 2,500 and Rs 5,000 was pegged at 18 per cent and the GST on those charging room rentals above Rs 5,000 was pegged 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 the tourism minister to review the rates once again.

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

Being the backbone of the tourism industry, eateries were expecting to be placed in the five per cent slab.

“One of the biggest hurdles for Indian hospitality and tourism, in terms of attracting international tourists is its uncompetitive tax structure,” said Bharat Malkani, past president, HRAWI.

“A country as small as Singapore witnesses 10.390 million tourists against 6.31 million for India,” he added.

“Nations like Malaysia and Thailand attracted 24.7 million and 19.09 million tourists in 2014 and earned foreign exchange of $18,299 million and $26,256 million. In contrast, India managed to earn a meagre $94 million,” stated Malkani.

“Hospitality is not only one of the highest foreign exchange grossers, but also one of the largest tax generators for the exchequer,” said Gurbaxish Singh Kohli, senior vice-president, HRAWI.

“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,” he added.

“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,” Kohli said.

“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,” he added.

“By rationalising taxes, India can easily quadruple its tourism revenues, and in absolute terms, earn more money for the exchequer,” said Datwani.

“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,” he added.