Budget 2019 expectations: Hospitality Industry demands tax relief from Modi-Jaitley to bring star hotels in middle class' range

Industry insiders demand that the GST rates for room tariff higher than Rs 7,500 should be lowered from 28 per cent to 12 per cent while on room tariff below Rs 7,500 it should be around 8 per cent.

Budget 2019 expectations: Hospitality Industry demands tax relief from Modi-Jaitley to bring star hotels in middle class' range
When star rated hotels would come into the reach of middle class, the footfall would go northward drastically. In fact, the government of India would be able to gain more revenue than what it is collecting in current circumstances. Photo source: PTI
By Asit Manohar
Updated: Wed, Jan 23, 2019
01:20 pm
New Delhi, ZeeBiz WebDesk
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In a bid to bring more footfall into the hotel business and bring star rated hotels into the affordable range of middle class, the hospitality industry has demanded reduction in GST rates from the Narendra Modi government at Centre when the Finance Minister Arun Jaitley stands in parliament to present the budget 2019 on February 1. They said that GST rates for room tariff higher than Rs 7,500 should be lowered from 28 per cent to 12 per cent while on room tariff below Rs 7,500 it should be around 8 per cent.

Speaking on the demand Vineet Tang, President at Vatika Hotels told Zee Business online, "The recent rise in per capita income in India has provided an opportunity for the star rated hotels to attract footfall from the higher middle class too. Now, even higher middle class or middle middle class is earning to a level when they can afford star rated hotel stay if its price comes down by around 7-8 per cent from current levels." On government of India is already falling short of Rs 20,000 crore in GST revenue collection Vineet Tang of Vatika Hotels said, "When star rated hotels would come into the reach of middle class, the footfall would go northward drastically. In fact, the government of India would be able to gain more revenue than what it is collecting in current circumstances."

See Zee Business video below for further budget cues:

Co-relating the matter with tourism industry Tejas Parulekar, Co-Founder, SaffronStays told, "Tourism industry in India has been crippled by not just the high GST structure, but also suffers from lack of accessibility in form of good roads and lack of dependable infrastructure like power. GST is at 28 per cent for room tariff higher than Rs 7500; even 18 per cent GST is high for room tariff below Rs.7500 since there are hardly any input credits. These rates make travel within India more expensive than foreign travel. One has seen a drop in the luxury travel segment, December which is the super peak season for hotels have seen unsatisfactory offtake in 2018. The industry ARR  has increased by a mere 1.5 per cent over 2016-17, which is not even beating the inflation rate."

Both Vineet Tang and Tejas Parulekar told that in the budget 2019, they hope to see a reduction in the top rate for GST from 28 per cent to 12 per cent and for room tarrif below Rs 7,500 reduction in GST rates from 12 per cent to 8 per cent. Food industry has benefited greatly from the 5 per cent tariff structure with no input credits and a similar structure would be fair to hotels and accommodation space as well.