The Goods and Services Tax (GST) Council met in Goa last Friday, on 20th September 2019, to reduce tax burden on various sectors of the economy including hotels. At the meeting, the council approved the proposal to slash GST rates on hotel room tariffs, bringing much-awaited relief to hospitality and tourism sector in India. As per the amended rates, rooms with a tariff of INR 7,500 per night or more will attract a GST of 18% against the existing 28%. The tax on daily room tariffs between INR 1,000 to INR 7,500 has been cut to 12% from 18%. Hotels with room tariffs below INR 1,000 per night will not be liable for GST. The amended rates will be applicable to hotels effective from 1st October 2019.
The country’s private tourism industry, along with the Ministry of Tourism, Government of India, has long been appealing to the Finance Ministry to reduce GST on the tourism sector and cap the highest tax slab on hotels to 18% in order to give boost to India as a competitive destination. It was expected that the GST Council will make a favourable decision this time, especially considering the decrease in the footfall of foreign tourists in India in the last year. The amendment has been received well by the tourism industry and the government, and it is expected to bring the hospitality sector back from the pangs of economic slowdown; whilst boosting tourism as well as generating more employment.