NEW DELHI: Hotel industry is divided over GST Council’s decision to levy 12% tax on room tariff of Rs 1,000 or less. While the Hotel Association of India (HAI) said this move gives a “wrong signal”, the Federation of Hotel and Restaurant Associations of India (FHRAI), said this should help the government to bring down the 18% GST rate slab on rooms that have tariff over Rs 7,500/day under the 12% slab.
“The recent announcement of levying a GST of 12% on hotels where the tariff is below Rs 1,000 per day gives a wrong signal that the industry continues to be vulnerable to the burden of levies in spite of its significant contribution to the nation’s GDP and jobs,” said HAI, the apex body of the Indian hospitality sector.
It added that the increase may also adversely affect the recent efforts of the government to encourage domestic travel under promotions like “Dekho Apna Desh”. Not to mention the fact that in most other Asian destinations that compete with India for the global traveller, the taxation level on hotels in any category ranges from 0 to 10 %.