FAITH the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) has made suggestions to Finance Ministry, Tourism Ministry & the CEA for GST rationalization of Indian Tourism Value Chain, to be taken up in the upcoming GST council meeting the next week.
FAITH has suggested initiating the process of undertaking a review and rationalization of GST applicable across different aspects of the Indian tourism, travel & hospitality industry. They said that this rationalization will enable some rationale support once the tourism industry attempts to begin its long crawl back from the pandemic.
Some of the measures proposed are briefly mentioned below:
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% without setoffs 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 are 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 are 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% with full Input tax credits and the rate should be delinked from any room tariffs if they are part of hotels.
GST refund on purchases by foreign tourists to be implemented as already enacted under GST. – Tax Refund for Tourists (TRT) Scheme of the IGST Act and its applicability should be ensured across all the product and tourism services availed by them in India. This will prevent India from exporting its taxes on tourism and will increase our global competitiveness in world tourism.
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.
Hotels to be enabled to charge 12% GST with full setoffs 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 %.