Impact of gst on tourism and hotel industry

The Good and Services Tax or GST as it is popularly known has affected every industry including the tourism and hotel industry.  One of the biggest effects is the differentiation of the tax levied on hotels as per room rates:

• Below Rs. 7500 per night - 5% GSt

• Above Rs. 7500 per night - 18% GST

As per experts in the industry, this has considerably reduced the burden on the customer, who were earlier paying higher service taxes. This is expected to give tourism a boost, as low and mid-budget travellers now will have to spend less on a holiday and can choose to go for places they have avoided because of the costs. As of now entry fees to see the famous monuments of India is not yet fallen under the GST, so Indian travellers can continue to enjoy them at reasonable rates.

However, the GST rate for hotels in the five star category is 28% and this has had an adverse effect on the number of guests opting for their services.