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Hotel industry cheers the rate cuts on hotel room tariffs

Finance Minister Nirmala Sitharaman announced nil tax for hotels room tariffs of up to Rs 1,000 per night.

September 21, 2019 / 09:10 AM IST
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Hotel industry on September 20 welcomed the reduction in GST on hotel room tariffs that, it said, will provide a major fillip to the hospitality and tourism sector. Finance Minister Nirmala Sitharaman announced nil tax for hotels room tariffs of up to Rs 1,000 per night. Hotels charging Rs 1,001 to Rs 7,500 per night would be levied with 12 percent tax as against the existing 18 percent.

Similarly, the tax on room tariff of above Rs 7,500 has been slashed to 18 percent from the existing 28 percent. Also, tax on outdoor catering has been reduced to 5 percent from existing 18 percent with input tax credit, Sitharaman said.

Welcoming the move, Federation of Associations in Indian Tourism & Hospitality (FAITH) Chairman and ITC ED Nakul Anand said: "The news on GST rationalization comes as a big shot in the arm for the tourism industry."

"This adds great spurt and momentum to the Hospitality industry and creates a positive sentiment that ensures more vigour and strength to Destination India," Anand said.

In similar vein, Radisson Hotel Group, South Asia, MD and VP operations Zubin Saxena said: "Widening the net for hotels to be charged at 12 percent GST is a step in the right direction and will help the hospitality business to slightly ease off amongst several pressures."

Reducing the rate for hotels above RS 7,500 also bodes well for the industry, he added.

IHG, SWA Regional Vice President Vivek Bhalla said: "We welcome the GST Council's decision to reduce the GST rates across segments for the hospitality industry."

It is a positive move which should help improve the market's sentiment overall. With the festive and holiday season around the corner, the timing could not have been better, he added.

"This will help us in offering our rooms at more competitive pricing and in turn greatly benifit our customers, moreover as festive season is approaching followed by a wedding season, we expect per room savings of 6-10 percent for each booking for customers which will provide a boost especially to the domestic tourism across India," Amatra Hotels and Resorts COO Anurag Dua said.

Chalet Hotels CEO Sanjay Sethi said the reduction would give a major fillip to the hospitality and tourism industry and make hotels more competitive globally.

"For companies like Chalet, reduced taxation helps us focus our efforts on key aspects like fresh investments in portfolio expansion, job creation and creating sustainable green hotels," he added.

first published: Sep 21, 2019 09:08 am