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FAITH suggests five measures for tourism GST rationalisation

Posted : 28 July 2022 10:08:04 | By TWO Bureau | GNN Bureau

FAITH suggests five measures for tourism GST rationalisation

Federation of Associations in Indian Tourism & Hospitality (FAITH) has thanked the GST Fitment Committee for favourably considering the drawback of taxes on foreign tourists on their goods purchases in India. It has recommended five rationalisation measures across the tourism, travel and hospitality value chain for consideration of the next GST Council meeting. These are:

· Hotels be allowed to charge IGST which will enable seamless availability of credit across India to all travel agents and tour operators and will thereby lead to building up a sustainable domestic holiday and meetings and conventions business within the country.

·Tour operators be enabled a special presumptive GST rate of 1.8 per cent with full GST setoffs. The current rate of 5 per cent without setoffs structurally implies that tour operators have an inbuilt margin of around 27.8 per cent which is an inherently flawed assumption of the prevailing business models. This by default creates an inherent linkage to value addition only and prevents a tax on tax.

· Travel agents be also allowed the option of exploring the reseller model for charging as they are distribution arms for airlines. This option will enable travel agents to structure optimal partnerships as per their business requirements between their clients and their airline partners.

· Tourist transporters be allowed the provision of availing GST setoffs on interstate tourist transport taxes, taxes on parking fees and taxes on fuel which is their biggest input cost.

· Restaurants should be allowed the additional option of charging GST at 12% with full input tax credits and the rate should be delinked from any room tariffs if they are part of hotels.

FAITH mentioned that Indian tourism has an immense inherent potential to create up to 10 crore additional jobs pan India over the long-term period, triple its GDP contribution and create forex earnings up to $75-$100 billion, and GST is a key enabler for creating this global and domestic competitiveness in tourism directly and through its indirect impact.

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Tags : #FAITH, #GST, #IGST, #favourably, #rationalisation

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