PANAJI
As reported by The Goan Everyday in its edition dated May 21, the GST rate of 28% on 5-star hotels could have been devastating for the tourism industry in the state.
When contacted, the hoteliers in Goa sounded relieved that the central government has listened to their pleas and reduced the GST for a certain tariff range.
In many cases, 5-star hotels in the state have to pay 21% tax on room-rent, which includes 12% peak luxury tax and 9% service tax. For these hotels, overall burden of taxation on room-rent will come down by 3%.
Shivam Verma, general manager, Royal Orchid Beach Resort & Spa at Utorda, said, “GST reduction has brought a big relief for us. Due to this, the tax liability will fall. Earlier, the way tax rates were announced by GST council, it seemed that all 5-star hotels would have to pay 28% tax, which is very high.”
Verma continued, “Hotels, which don’t fall in the category of 5-star deluxe, were not in position to pay a GST of 28%.”
It is also reported that the GST Council has reduced the tax rate on food and beverages (which means restaurants) of hotels with a tariff range of Rs 2,500 to Rs 7,500 per day from 28% earlier to 18% now.
Savio Messias, president, Travel and Tourism Association of Goa (TTAG), said, “On June 15, we wrote a memorandum to the Chief Minister, Manohar Parrikar, pointing out that hotel rates in Goa/India are nearly double of Thailand. This was because Thailand has a GST of 8%, while Goa/India would have a GST of 28%.”
The TTAG further informed that Parrikar took up this matter with Union Finance Minister, Arun Jaitley and urged him to reconsider the GST rates. It is believed that it was after Parrikar’s and Vasundhara Raje’s (CM of Rajasthan) intervention that the GST rates for hotels were brought down.
A delegation of TTAG even visited Parrikar to thank him for the role he has played in bringing down the tax rates for hotels.
Although, the GST rates on hotels have been rationalised, but there is still grey area.
Sandip Bhandare, president, Goa Chamber of Commerce and Industry (GCCI), said, “Suppose you are paying more than Rs 7,500 per day tariff to a hotel. You go to their restaurant to have food. Should they charge you 28% GST (depending upon the tariff) or 18% (because you may not tell the restaurant that you are staying at the hotel, as restaurants typically are open to all?”
Bhandare, however, added that it is a sensible move to bring GST down to 18%, as such a tax rate was considered appropriate.
Meanwhile, there will be no GST if room rate in a hotel is less than Rs 1,000 per day. There will be a GST of 12% on room rates in the range of Rs 1,000 to Rs 2,500.
