Chennai: The Federation of Associations in Indian Tourism and Hospitality (FAITH), has urged the GST Commissionerate and Central Revenue department to amend Section 2(44)c to include the tourism and hospitality industry services in the ‘export services’.
At present, the relevant section in the GST model law considers export service as one which is rendered abroad, thereby barring tourism and hospitality industry from having the same tax benefits under the GST. The plea has come ahead of the first meeting of the GST Council to be held on September 22-23.
FAITH, which represents all the tourism and hospitality industry associations in India, has explained the rationale that tourism services to foreign exchange paying tourists cannot be rendered abroad as all our destinations are within India. It is an intangible product and hence an exception needs to be provided in the law itself to the tourism and hospitality industry, according to FAITH.
FAITH will also ask the GST council for a below 10 per cent GST rating on domestic tourism. This is in line with global practices where the introduction of GST has seen tourism GST kept at less than half the standard rate of GST. Apart from classifying tourism and hospitality industry as export service, the federation has also sought zero per cent rating of GST on tourism and hospitality exports to make India a globally competitive destination.
“Eighteen to 25 per cent indirect taxation will make India uncompetitive,” the federation claimed and added that the implementation of both these recommendations have the potential to spur our tourism FOREX earnings to $30-$35 billion from 13-15 million foreign tourists and our domestic tourism to 1.8-2 billion domestic visitations. This could double the employment induced by tourism to 9 crore jobs from 4.5 crore jobs.
