Travel industry fears post-GST jitters

15-07-2017
DH

“For inbound traffic, GST is negative and complicated. It has made travelling in India more expensive. It is a mixed bag of sorts. The challenge is that there are so many different rates of tax which are not very clear,” FCM Travel Solutions Executive Director (Leisure Businesses) Shravan Gupta said.

A tour package includes several components like transportation (airline flights), meals (at restaurants), sightseeing and hotels. When availing a particular domestic tour package, against the backdrop of the GST regime, customers would be charged a range of different rates depending on the services and conveniences they purchase.For instance, in terms of business class air travel, the GST slab is 12%, while for economy class, the slab is 5%. 

Similarly, in terms of room rent in hotels, there are only three slabs under GST – from Rs 0-2,500 at 5%, Rs 2,500-7,500 at 18%, and above Rs 7,500 at 28%.

Travel companies feel that this lack of clarity in the way hotels are taxed under GST is bound to affect the cost of domestic travel in India. “There is no clarity on whether GST should be charged on (hotel) rack rate, or contracted rate. Hotels have taken the view now to charge on the rack rate, which is making it further expensive,” he said, adding that a majority of travel within India happens with mid- or high-end accommodation (at 18% or 28%).

Meanwhile, the service tax on tour packages which hit 9% in February, has been subsumed under GST, which stands at 5%.

According to SOTC Travel Managing Director Vishal Suri, “The 5% GST rate on tour packages is a welcome move for consumers. However, high-end hotels and business class air travel is going to be costlier under the GST. Inthe long term though, it is expected to enable much-required growth that the travel industry needs.”

Thomas Cook, meanwhile, claims to witness minimal impact from GST. Talking to DH, Thomas Cook India Group CFO and President (Finance and Accounts) Debasis Nandy said, “The GST for tour packages, both domestic and international, has seen a marginal increase from 4.5% to 5%, and as such, we haven’t seen any impact on holiday demand; in fact, this is seen as a relief by consumers as it compares extremely favourable against the current service tax which saw a doubling of the rate from 4.5% to 9%.”

Write your Comments on this Article

Disclaimer: Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Konkanworld.com will not be responsible for any defamatory message posted under this article. Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on Konkanworld.com to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using Konkanworld.com will be purely at your own risk, and in no way will Konkanworld.com be held responsible. Similarly, Konkanworld.com reserves the right to edit / block / delete the messages without notice any content received from readers.

  • Konkan World
  • Stay Connected
  • Facebook Google+ Twitter YouTube

KONKAN WORLD offers accurate, up-to-date, a large collection of videos from KONKAN WORLD VIDEOS and indulge in fun you will not find else where!.
© Copyright 2014 Konkanworld media Inc