Tourism association urge for GST rationalisation at 28 May council meeting

NEW DELHI: The Federation of Associations in Indian Tourism & Hospitality (FAITH) on Thursday urged the finance ministry, tourism ministry, and the chief economic advisor to rationalise goods and services taxes (GST) across the tourism value chain at the council meeting scheduled for 28 May.

The association has suggested initiating the process of undertaking a review and rationalisation of GST applicable across different aspects of tourism, travel & hospitality industry. It said the rationalisation will enable some support once the tourism industry attempts to begin its long-drawn recovery from the pandemic.

It has suggested that hotels should be allowed to charge IGST which will enable seamless availability of credit across India to all travel agents and tour operators. It will lead to building up a sustainable domestic holidays, meetings and conventions business within the country.

Hotels to be allowed to charge 12% GST with full set-offs irrespective of their tariff categories which will ensure that Indian hospitality GST becomes more competitive globally as in most tourism focused countries it is below 10%.

Tour operators should be allowed a special presumptive GST rate of 1.8% with full GST set-offs. The current rate of 5% without set-offs structurally implies that tour operators have an inbuilt margin of around 27.8% which is an inherently flawed assumption in the internet economy.

Travel agents should be allowed the option of exploring reseller model for charging as they are distribution arms for airlines. This option will enable travel agents to structure optimal partnerships as per their business requirements between their clients and their airline partners. Tourist transporters be allowed the provision for availing GST set-offs on interstate tourist transport taxes, taxes on parking fees and on taxes on fuel which will cut input costs.

The body also suggested that restaurants should be also allowed the option of charging GST at 12% with full input tax credits and the rate should be delinked from any room tariffs if they are part of hotels. Tourism, travel & hospitality players must be allowed to get refund of unutilized GST credit lying with state governments which will enable them to get much needed liquidity.