High GST may cause damage to India's tourism prospects
CHENNAI: Seeking a review of GST rates of 28 per cent proposed on hotels, the Federation of Associations in Indian Tourism & Hospitality (Faith, said the proposed slab, if implemented, will make “India hugely uncompetitive.”
Documenting tax structure on tourism products including hotels and restaurants in countries in the region, Faith said that India would not be able to compete with those destinations in luring tourists as well as meetings and conferences with this high tax structure.
“We compete in the global marketplace with countries such as Thailand, Malaysia and Singapore. Thailand has a consolidated indirect hotel tax rate of 7 per cent, 17.per cent on restaurants. Singapore has a hotel VAT of 7 per cent and 7 per cent on restaurants. Malaysia has a hotel VAT of 6 per cent and a 6 per cent on restaurants. A 3-day stay by a foreign tourist at a daily rate of $150 (assuming hotel and food & beverage) will be taxed per night in India at $42 (not including cesses), $18 in Thailand (weighted average), of $10.5 in Singapore, $9 in Malaysia. That implies on a total stay of 3 nights, for one person, India now becomes expensive by $72 v/s Thailand, by $95 v/s Singapore and by $100 v/s Malaysia,” the apex representative body of the travel & tourism and hospitality associations, said in its representation.
The federation further claimed that a levy of 28 per cent could damage unprecedentedly the tourism industry from which it will find it extremely difficult to recover. “This will not only impact inbound tourist traffic, but also spur the domestic meetings & conferences segment and holiday makers to increasingly travel to our South and East Asian competitors, rather than within India, since these destination will seem even more lucrative now,” it said.