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New GST rates foster tourism in India!

The 37th GST Council meeting held on the 20th September 2019, where the council took several decisions related to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues. 

As far as the hospitality and tourism industry is concerned, the council has slashed hotel tariff rates, which is lauded by hoteliers across India. Not only this, but the council has also rejigged the tariff slabs.

The changes in the room tariff slab are listed below,

Transaction Value per Unit (Rs) per day

GST

Rs 1000 and less

Nil

Rs 1001 to Rs 7500

12%

Rs 7501 and more

18%

 

The council has reduced tariff rate for outdoor catering too. Hotels, with outdoor catering rate of Rs. 7501, attract 18% with ITC and 5% without ITC. Hotels, with in-house catering rate of Rs. 7501 and above, shall remain at 18% with ITC.

The new GST rates will be effective from 1st October 2019. There will be a marked growth in India’s hospitality and tourism industry. Rashesh Shah, analyst, ICICI Securities Ltd, says, “Hotel will pass on the rate cuts to customers by way of lower room rates. This will eventually boost demand across hotel segments. India will become more attractive and competitive as a tourist destination too.”

The hospitality & tourism industry is going to be more lucrative in the years ahead, as the price cuts will increase the occupancy rates and boost hotel revenue and make the market more attractive among tourists.