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Tourism sector seeks GST rationalisation

FAITH, the policy federation of all the national associations representing the complete tourism, travel and hospitality industry in India, has made suggestions to the Finance Ministry and Tourism Ministry for GST rationalisation of Indian tourism value chain, to be taken up in the upcoming GST council meeting next week.

Updated May 20, 2021 13:33 PM

Tourism sector seeks GST rationalisation

FAITH has suggested to initiate the process of undertaking a review and rationalisation of GST applicable across different aspects of the Indian tourism, travel and hospitality industry. It said that this rationalisation will enable some rationale support once the tourism industry attempts to begin its long crawl back from the pandemic.

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

Tour operators to be enabled a special presumptive GST rate of 1.8% with full GST setoffs. The current rate of 5 per cent without setoffs structurally implies that tour operators have an inbuilt margin of around 27.8 per cent which is an inherently flawed assumption in the internet economy.

Travel Agents be also allowed the option of exploring the 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 setoffs on interstate tourist transport taxes, taxes on parking fees and on taxes on fuel which is their biggest input costs.

Restaurants should be also allowed the option of charging GST at 12 per cent with full input tax credits and the rate should be delinked from any room tariffs if they are part of hotels.

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