28 per cent tax on rooms above Rs 7,500 a huge blow to tourists, resorts
Financial experts say that the increase of tax rates will take its toll on the customers.
Hyderabad: If you are looking at a holiday in an expensive resort, get ready to shell out a heavy-duty tax. Post GST, rooms that cost over 7,500 rupees per day, will be levied 28 percent tax.
“We have to pay 28 percent tax other than luxury tax for our rooms, which seems a bit extravagant. The GST has been implemented to create a sound tax regime but this is a high price to pay for a weekend getaway,” says Jameel Mohammed, a resort owner.
Shahbaz Husain, owner of Button Eyes Resort says, “Earlier in a bid to promote tourism, the government had given us forty per cent exemption on service tax. My customers were paying a total of nine per cent tax on our rooms that cost Rs 4,500 but now the tax has increased to 18 per cent. Under the new GST system, there will be no exemptions. This will prove to be costly for our customers.”
Financial experts say that the increase of tax rates will take its toll on the customers.
Vishnu Venugopal, a Chartered Accountant said, “This is a huge blow for resorts at tourist locations. Visitors prefer to stay at well known resorts. These resorts have rooms that are highly priced anyways. With the additional cost of the heavy tax, the room cost will hike up quite a bit. GST which is an indirect tax places the burden solely on the consumers’ shoulders and they will have to bear the brunt of it.”
Venkat Reddy, the president of Hotels Association said that customers will take time getting used to the new tax rates. ‘
He said, “Food at AC restaurants in resorts will be taxed at eighteen percent and in non Ac restaurants at twelve percent. This will also be added to the bill.”
Room Rent Tax Rate
Rs 1,000-Rs 2,499 12%
Rs 2,500-Rs 7,499 18%
Above Rs 7,500 28%
