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GST Rate Cut on Hotel Tariffs Might Boost Tourism

GST Rate Cut on Hotel

Goods and Services Tax (GST) Council in its 37th Meeting held in Goa announced a reduction in the tax rate for hotel room tariffs. On Monday, Prahlad Singh Patel, Union Minister of State (Independent Charge) for Tourism and Culture said that the recent announcement to lower the tax rate is a Diwali gift for the tourism sector.

Investors too showed interest in the tax cut as hotel stocks zoomed up to 20 percent. In anticipation of a rate cut, shares of premium luxury hotels ascended by about 5%. Even those of mid-size hotels rose significantly, reacting favorably to the news.

On Friday, GST Council not only decided to lower GST rates on hotel tariffs but also outdoor catering, giving a much-needed boost to the hospitality sector. On hotel rooms with tariffs of up to ₹7500 per night, the GST rate has been cut to 12% from the existing 18%. Similarly, the tax rate on room tariff of above ₹7500 has been reduced from the existing 28% to 18%. There will be no GST for hotel rooms with tariffs below ₹1000 per night. Moreover, the rate of outdoor catering has also been slashed from the current 18 to 5%.

Addressing the press conference on Indian Tourism Mart (ITM) in New Delhi, Patel said, “The cut in the tax rate is a Diwali gift and will give a boost to the tourism sector.” ITM was being organized by the Ministry of Tourism and Federation of Associations in Indian Tourism and Hospitality (FAITH) with the objective of promoting tourist destinations and products of the country in international source markets.

Over 240 international delegates from 51 countries including Germany, France, Italy, Canada, Brazil, and the UK have confirmed their participation. The two-day event will provide an opportunity for the international buyer delegates to see the tourism facilities available in the country such as tourism destinations, hotels, airports, etc.

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