A Minor project report on

THE STUDY OF IMPACT OF

GST ON HOTEL INDUSTRY

Submitted in partial fulfilment of the requirements for

BCOM (Hons.) programme
Guru Gobind Singh Indraprastha University, Delhi

Submitted to Submitted by
Dr. Shikha Gupta Harishkesh Tiwari

(Associate Professor) Enrolment no.

03519288821

BATCH 2021-2024

Lingaya’s Lalita Devi Institute of Management &

Sciences Mandi Road, Mandi, New Delhi-110047

1
 DECLARATION

This is to certify that I have completed the Project titled “A Project Report on
The Study of Impact of GST on Hotel Industry ” under the guidance of “”
in partial fulfilment of the requirement for the award of Degree of Bachelor
of B. Com
(H) at Lingaya’s Lalita Devi Institute of Management and Sciences, Delhi.
This is an original piece of work & I have not submitted it earlier elsewhere.

Date:

Signature

Name: Harishkesh Tiwari

Enrolment Number:

03519288821

2
 ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people who directly or indirectly

contributed in the development of this work and who influenced my thinking
behaviour and acts during the course of study.

I express my sincere gratitude to Dr. Pranav Mishra the worthy Director of

Lingaya‟s Lalita Devi Institute of Management & Sciences, for providing me an
opportunity of doing this project under his leadership.

I also extended my sincere indebtedness to Sachin sir” Assoc. Professor,

LLDIMS, New Delhi taught us this subject and provided her valuable suggestion
and precious time in accomplishing my project. I also take the opportunity to
express my sincere gratitude to each and every person, who directly or indirectly
helped me throughout the project and without any one of them this project would
not have been possible.

The immense learning from this project would be indelible forever.

Name: Harishkesh Tiwari

Enrolment Number:

03519288821

3
 INDEX

Chapter TITLE Page No.

No.

1. INTRODUCTION 5- 13

2. OBJECTIVES OF THE STUDY 14-16

3. LITERATURE OF REVIEW 17-19

4. RESEARCH METHODOLOGY 20-26

5. LIMITATION OF THE STUDY 27-29

6. DATA ANALYSIS INTERPRETATION 30-41

7. CONCLUSION 42-43

8. BIBLIOGRAPHY 44

4
INTRODUCTION

5
 INTRODUCTION OF GOODS & SERVICES TAX IN INDIA
Introduction of Goods and Services Tax (GST) in India marks a significant paradigm shift in the country's
taxation system. Implemented on July 1, 2017, GST replaced a complex web of indirect taxes levied by the
central and state governments. It aimed to streamline the tax structure, eliminate cascading effects, boost
compliance, and create a unified national market.

Prior to GST, India followed a multi-tiered tax system where taxes were levied at various stages of
production and distribution, leading to tax on tax, known as cascading effect. This resulted in
inefficiencies, increased costs for businesses, and hindered the free flow of goods and services across state
borders.

The GST regime introduced a comprehensive tax on the supply of goods and services at each stage of the
supply chain, with credit of taxes paid at previous stages available for set-off against the tax liability at
subsequent stages. This effectively eliminated the cascading effect, promoting efficiency and reducing the
overall tax burden.

GST in India is a dual system, with both the central and state governments levying taxes concurrently on a
common tax base. The tax is administered through a single interface called the Goods and Services Tax
Network (GSTN), which provides a seamless platform for registration, filing of returns, and payment of
taxes.

GST has brought about significant changes in the Indian economy, simplifying the tax structure,
improving tax compliance, and facilitating ease of doing business. While challenges remain, including the
need for further simplification and rationalization of tax rates, GST represents a landmark reform in India's
tax system, contributing to its economic growth and development.

Critics point out, however, that the GST may disproportionately burden people whoseself-reported income are in the
lowest and middle income brackets, making it a regressive tax.1 These critics argue that GST can therefore
exacerbate income inequality and contribute to social and economic disparities. In order to address these concerns,
some countries have introduced GST exemptions or reduced GST rates on essential goods and services, such as
food and healthcare. Others have implemented GST credits or rebates to help offset the impact of GST on lower-
income households.

Goods and services tax should not be confused with the generation-skipping trust,also abbreviated GST (and its
related taxation, GST).

KEY TAKEAWAYS

 The goods and services tax (GST) is a tax on goods and services solddomestically for
consumption. The tax is included in the final price and paid by consumers at point of saleand passed to the
government by the seller.

 The GST is usually taxed as a single rate across a nation.

Governments prefer GST as it simplifies the taxation system and reduces taxavoidance.

 Critics of GST say it burdens lower income earners more than higher incomeearners.

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 FEATURES OF GOODS AND SERVICES TAX

Goods and Services Tax (GST) in India introduced several key features aimed at simplifying the tax
structure, enhancing compliance, and fostering economic growth. Here are some prominent features of
GST in India:

1. One Nation, One Tax: GST replaced a myriad of indirect taxes levied by the central and
state governments, creating a unified national tax system. This simplification aimed to reduce
tax complexities, eliminate the cascading effect, and establish a seamless nationwide market.

2. Dual GST Structure: GST in India operates on a dual system, with both the central government
and state governments levying taxes concurrently on a common tax base. The central component
is known as Central GST (CGST), while the state component is known as State GST (SGST). This
dual structure ensures fiscal autonomy for both levels of government while maintaining uniformity
in tax administration.

3. Destination-Based Taxation: GST follows a destination-based principle, wherein taxes are levied
based on the location of consumption rather than the location of production. This shift promotes
fairer distribution of tax revenue among states and encourages the free flow of goods and services
across state borders.

4. Input Tax Credit (ITC): One of the fundamental features of GST is the concept of Input Tax
Credit, which allows businesses to claim credit for the taxes paid on inputs used in the production
or provision of goods and services. This mechanism prevents the cascading effect of taxes and
reduces the overall tax burden on businesses.

5. Comprehensive Tax Base: GST encompasses a wide range of goods and services, including
both goods and services previously subject to different tax regimes such as excise duty, service
tax, value-added tax (VAT), and others. This comprehensive tax base ensures that most economic
activities are covered under the GST regime.

6. Threshold Exemption: To ease compliance for small businesses, GST provides a threshold
exemption limit below which businesses are not required to register for GST or levy GST on
their supplies. This exemption threshold varies for goods and services and is determined by the
annual turnover of the business.

7. Online Tax Filing and Payment: GST introduced a digital platform called the Goods and
Services Tax Network (GSTN), which facilitates online registration, filing of returns, payment of
taxes, and other compliance activities. This online system streamlines administrative processes and
enhances transparency in tax administration.

8. Composition Scheme: GST offers a composition scheme for small businesses with a turnover
below a certain threshold. Under this scheme, eligible taxpayers can pay tax at a fixed rate on
their turnover without the need for detailed invoicing or claiming input tax credits, simplifying
compliance for small businesses.

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 OBJECTIVES OF GOODS AND SERVICES TAX
The Goods and Services Tax (GST) in India was introduced with several key objectives aimed at
transforming the country's taxation system and fostering economic growth. Some of the primary objectives
of GST in India include:

1. Simplify Tax Structure: GST aims to simplify the complex web of indirect taxes that existed
prior to its implementation. By replacing multiple central and state taxes with a single tax, GST
streamlines the tax structure, making it more transparent and easier to understand for taxpayers.

2. Eliminate Cascading Effect: One of the major goals of GST is to eliminate the cascading effect of
taxes, also known as tax on tax. Under the previous tax regime, taxes were levied at multiple stages
of production and distribution, leading to an accumulation of taxes. GST allows for the seamless
flow of input tax credit, ensuring that taxes are levied only on the value addition at each stage of
the supply chain.

3. Create a Unified National Market: GST aims to create a unified national market by removing
inter-state barriers to trade. With the adoption of a destination-based tax system, goods and
services can move freely across state borders without being subjected to multiple taxes and
compliance requirements, promoting ease of doing business.

4. Boost Economic Efficiency: By simplifying the tax structure, reducing compliance burdens, and
eliminating inefficiencies in the tax system, GST aims to enhance economic efficiency. It
encourages businesses to focus on their core activities rather than on tax planning and compliance,
thereby promoting productivity and competitiveness.

5. Promote Compliance and Transparency: GST seeks to improve tax compliance by

leveraging technology and automation. The GSTN platform provides a centralized system for
registration, filing of returns, and payment of taxes, making it easier for taxpayers to comply
with their tax obligations. This increased transparency in tax administration helps reduce tax
evasion and enhances revenue collection for the government.

6. Ensure Fiscal Autonomy for States: Despite creating a unified tax system, GST respects the fiscal
autonomy of states by implementing a dual GST structure. This allows states to levy their own
taxes (State GST) while ensuring uniformity and consistency in tax administration across the
country.

Overall, the objective of GST in India is to create a more efficient, transparent, and business-friendly tax
regime that fosters economic growth, encourages investment, and benefits both taxpayers and the
economy as a whole.

8
ADVANTAGE AND DISADVANTAGE OF GOODS AND SERVICES TAX
Advantages:
1. Simplified Tax Structure: GST replaces a complex web of indirect taxes with a single, unified
tax, making the tax system easier to understand and comply with for businesses and taxpayers.

2. Elimination of Cascading Effect: GST allows for the seamless flow of input tax credit, eliminating
the cascading effect of taxes, where taxes are levied on top of taxes at each stage of production and
distribution.

3. Unified National Market: By removing inter-state barriers to trade and adopting a destination-based tax
system, GST promotes the creation of a unified national market, facilitating the free movement of goods
and services across state borders.

4. Enhanced Economic Efficiency: GST simplifies tax compliance, reduces transaction costs, and
promotes economic efficiency by allowing businesses to focus on their core activities rather than on tax-
related complexities.

5. Improved Tax Compliance: The digital platform provided by the GSTN streamlines tax
administration, making it easier for taxpayers to register, file returns, and pay taxes online, thus reducing
the scope for tax evasion and improving tax compliance.

6. Fiscal Autonomy for States: Despite creating a unified tax system, GST respects the fiscal autonomy
of states by allowing them to levy their own taxes (State GST), thereby ensuring consistency in tax
administration while allowing states to retain control over their tax revenues.

Disadvantages:
1. Initial Implementation Challenges: The initial implementation of GST in India faced various
challenges, including technological issues, compliance complexities, and transitional difficulties,
which caused disruptions for businesses and taxpayers.

2. Compliance Burden for Small Businesses: While GST aims to simplify tax compliance, the
compliance burden may still be significant for small businesses, especially those operating across
multiple states, as they need to adapt to new filing requirements and technological platforms.

3. Complex Tax Structure: Despite being touted as a simplified tax system, GST in India still
retains multiple tax rates for different goods and services, leading to complexity and confusion,
especially for businesses trying to determine the applicable tax rate for their products or services.

4. Impact on Inflation: The introduction of GST led to changes in the tax rates for various goods and
services, which could have short-term inflationary effects as businesses adjust to the new tax regime and
pass on the increased costs to consumers.

5. Potential Revenue Loss for States: Some states may experience revenue losses in the short term due to
the transition to GST, especially if their previous tax revenues were higher than what they receive under
the GST regime, leading to concerns about fiscal sustainability and the need for compensation
mechanisms.

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 TYPES OF GOODS AND SERVICES

In India, Goods and Services Tax (GST) is implemented through a dual GST structure, comprising multiple
types of GST. The main types of GST in India are:

1. Central Goods and Services Tax (CGST): CGST is the component of GST levied by the central
government on the supply of goods and services within a state. It replaces taxes such as Central Excise
Duty, Service Tax, Central Sales Tax, and additional duties of customs and excise.

2. State Goods and Services Tax (SGST): SGST is the component of GST levied by the state
governments on the supply of goods and services within a state. It replaces taxes such as Value Added
Tax (VAT), Sales Tax, Entertainment Tax, Entry Tax, and various other state taxes.

3. Integrated Goods and Services Tax (IGST): IGST is applicable to the supply of goods and services
between different states in India, as well as imports and exports. It is levied by the central government but
collected and apportioned to the destination state. IGST replaces the previous system of Central Sales Tax
on inter-state transactions.

4. Union Territory Goods and Services Tax (UTGST): UTGST is the component of GST applicable
to the Union Territories of India, similar to SGST for states. It is levied by the central government but
administered by the respective Union Territory governments.

These types of GST collectively form the dual GST structure in India, where both the central and state
governments have the authority to levy and collect taxes on the supply of goods and services. The dual
GST system ensures fiscal autonomy for both levels of government while maintaining uniformity and
consistency in tax administration across the country.

1
 STRUCTURE OF GOODS AND SERVICES TAX
The Goods and Services Tax (GST) structure in India is a comprehensive indirect tax system that has
replaced a multitude of central and state taxes such as excise duty, service tax, value-added tax (VAT), and
others. Here's an overview of its structure:

1. Dual GST System: GST in India follows a dual structure, meaning it is levied by both the central
and state governments. There are two components of GST:

- Central Goods and Services Tax (CGST): Levied by the Central Government on intra-state
supplies of goods and services.

- State Goods and Services Tax (SGST): Levied by the State Government on intra-state supplies of
goods and services.

2. Integrated GST (IGST): This is applicable on inter-state supplies of goods and services and is
collected by the Central Government. IGST ensures that tax revenues are equally distributed between the
state of origin and the state of consumption.

3. Union Territory GST (UTGST): For the union territories of India, a separate Union Territory
GST (UTGST) is levied, similar to SGST.

4. Taxable Events: GST is levied on the supply of goods and services. The term 'supply' is broad
and includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease, or
disposal.

5. Threshold Limits: GST is applicable to businesses whose turnover exceeds a certain threshold
limit. For most states, the threshold limit is Rs. 20 lakhs (Rs. 10 lakhs for special category states).

6. Tax Slabs: GST in India has multiple tax slabs based on the type of goods or services. As of
recent updates, there are primarily four tax slabs:

- 5% (for essential items)

- 12% and 18% (standard rates)

- 28% (for luxury items and certain goods)

Additionally, there are goods and services that are exempted from GST, such as healthcare and education
services.

7. Composition Scheme: Small taxpayers with turnover up to a specified limit can opt for the
composition scheme under GST, which allows them to pay tax at a fixed rate on their turnover and file
simplified returns.

8. Input Tax Credit (ITC): Under GST, businesses can claim input tax credit on the taxes paid on
inputs (goods and services used in the business). This helps in eliminating the cascading effect of taxes
and reduces the tax burden on the end consumer

1
 HOTEL INDUSTRY
The concept of shelter in India is not new. 20th century is turning point for hotel industry in India and many business
owners entered into the field. Hotel industry is a service oriented sector which offers many facilities/ services. On the
bases of facilities provided by hotels they are categorized into different tax slabs under GST. Hotel industry is one of
the growing industry in service sector.Due to the growth in tourism and travel with rising domestic and foreign
tourist, hotel sectoris continuously growing. The Indian hotel market worth estimated around US$ 17 billion. Hotel
industry contributes greatly to tourism and around 7.5% of national GDP.

“GST shall be payable by taxable person on the supply of goods and services. Taxable person is defined in section 9
of model GST law which stipulates that a person who carries on any business atany place in Indian state and who is
registered or required to be registered under schedule III of the Act”. Services provided by hotel industry,

Serving of food and liquor

Room accommodation services

Rent a cab

Catering

Laundry services

Renting space for events, conference etc.

Business support service.

Beauty parlour.

Club and gymnasium services.

Telecommunication like Fax, WIFI, telephone.

Before GST, hotel industry was under different kinds of taxes like services tax, VAT, luxury tax andit was creating
complexity in accounting. Tax rate was not uniform as they were imposed by both state and central government. But
after July 1st 2017 all hotels and restaurants came under single tax system. Now entire India is subjected to impose
single tax rate irrespective of where they situated.

Section 2 deals with introduction of hotel industry. A commercial establishment providing lodgingmeals and other
guest services in general, hospitality minimum of six letting bedrooms, at least three of must have attached private
bathroom facilities. Although hotels are classified into „star‟ categories (1 star to 5 stars), there is no method of
assigning these ratings and compliance with customary requirements is voluntary.

A US hotel with certain rating may look differ from European or Asian with same rating and wouldprovide a different
level of amenities, rate of facilities, and quality of service.

Star hotel provides good and spacious accommodation high-class decoration furnishings and color TV better-
equipped bedrooms each with a telephone and one or more bars or lounges with attachedprivate bathrooms.

Hotel industry plays a vital role in the development of services sector. Hospitality plays a major role in this sector.
Tourism and Hotel paves the way for development of exchange currency in India.Star hotels in various places
connected with tourism places.

People from various countries traveling throughout the world want to stay and enjoy the whole day.The Luxury tax
and combined service tax is 6 % fixed by different states.

1
After GST, highest rate is 28%, which is less expensive; and this GST is for star hotels only. Industry sources said
that the average combined tax rate is in the range of 18% to22%.Under thenew GST if we stay in dinning at five star
is more expensive.

However budget hotels have been spared with room rates of less than Rs.1000/- is nil, Between(Rs.1000 to Rs.2500)
is 12%,(Rs2500 to Rs5000) is 18% and aboveRs.5000 is 28%.

1
OBJECTIVES OF THE STUDY

1
 OBJECTIVES OF THE STUDY

1. To Reduce Complications in Tax Administration and Compliances:

- The primary objective of this study is to examine the extent to which the implementation of Goods
and Services Tax (GST) has simplified tax administration and compliance processes for restaurants in
India.

2. To Create Awareness Among People Engaged in the Restaurant Sector:

- Another goal is to raise awareness among stakeholders in the restaurant sector about the key
provisions, implications, and compliance requirements of GST.

3. To Cognize the Concept of GST on Restaurants:

- The study aims to enhance understanding and knowledge about the specific application of GST
to restaurants, including its scope, coverage, and implications for various types of food service
establishments.

4. To Study Features of GST and Restaurants:

- This objective involves a comprehensive examination of the features of GST as they relate to the
restaurant industry, including tax rates, input tax credit mechanisms, invoicing requirements, and
filing procedures.

5. To Evaluate Positive and Negative Impact of GST on Restaurant Sector:

- The study seeks to assess the dual impact of GST on the restaurant sector, including both positive
and negative implications such as changes in pricing, consumer behavior, operational efficiency, and
overall business viability.

6. To Furnish Information for Further Research Work on GST:

- Lastly, the study aims to provide valuable insights and information that can serve as a foundation for
future research endeavors focused on exploring additional aspects of GST implementation and its effects on
the restaurant industry.

7. To Understand Pricing Strategies:

- Another goal is to understand how GST has influenced pricing strategies in the hotel industry, including
changes in room rates, tariffs, and ancillary service charges.

8. To Examine Consumer Behavior:

- The study seeks to examine changes in consumer behavior and demand patterns in response to GST,
including shifts in booking trends, spending habits, and preferences for different types of
accommodations.

9. To Explore Competitive Landscape:

- This objective involves exploring the impact of GST on the competitive landscape of the hotel industry, including
market trends, industry consolidation, and competitive strategies adopted by hoteliers.

1
10. To Identify Policy Implications:

- The study aims to identify policy implications arising from the implementation of GST in the hotel
industry, including potential areas for policy intervention to address challenges or leverage opportunities.

11. To Provide Recommendations:

- Lastly, the objective is to provide actionable recommendations for policymakers, hoteliers, and other
stakeholders to optimize the benefits of GST and mitigate any adverse effects on the hotel industry.

By addressing these objectives, this study aims to contribute to a deeper understanding of the impact of GST on the
restaurant sector and provide practical insights for policymakers, industry practitioners, researchers, and other
stakeholders.

1
LITERATURE OF REVIEW

1
 LITERATURE OF REVIEW

The proposed GST is likely to change the whole scenario of current indirect tax system. It is considered as biggest
tax reform since 1947. Currently, in India complicated indirect tax system is followed with imbrication of taxes
imposed by unions and states separately. GST will unify all the indirect taxes under as umbrella and will create a
smooth national market. Expert says that GSTwill help the economy to grow in more efficient manner by
improving the tax collection is it will disrupt all the tax barriers between states and integrate country by single tax
rate.

GST was first introduced by France in 1954 and now it is followed by 140 countries . Most of the countries followed
unified GST while some countries like Brazil , Canada follow a dual GST system where tax imposed by central and
state both. In India also dual system of GST is proposed including CGST and SGST.

Vineet Chauhan (2017)

Conduct a study on “ Measuring Awareness about implementation of GST.” A study survey of small business unit of
Rajasthan State in India. The study seeks to evaluate the awareness of the business owners about GST difficulties
they face to encase of the current awareness about it. 148 small business owners were analyses in order to identify
the awareness about GST from Rajasthan state and the kind and extent of relief provided and the implementation of
the provision under GST Law.

Poonam (2017)

The biggest problems in Indian tax system like Cascading effect & tax evasion, distortion can be minimized by
implementing GST. After amalgamation of local state and central taxes competitiveness of industry, exporter and
company will increase. The extra revenue which can be generated from broaden tax base structure can be utilized for
the growth of nation. In economy tax polices play an important role because of their impact on efficiency and equity.
Indirect tax reformshave been as integral part of the liberalization process since new economic reforms

Times of India (26 July 2017)

page no 1&17 it is stated that Sweet makers are confused with fixing the tax for their products as the ingredients
used in the sweets are taxed separately as raw material and as finished goods the products its taxing is different ex.
Plain burfi is 5% taxed but chocolate burfi is fixed with 28%. Plain burfi mixed with other dry fruits is of 12%. This
taxing system makes the Sweet makers to getconfused on how much GST to be fixed for which product.

Times of India(27 July 2017)

Stated that the GST implication across different places for the same product has wider differenceswhich the
consumers are unaware, resulting them in surprise. Ex A Rasamalai sold in counter at ashop is taxed with 5% but if it
is served in the hotel it is taxed with 18% this has resulted in difference of consumers shopping to purchase the
similar products

Dr. G Gabriel Prabhu

GST is here, and businesses are still trying to understand the changes required in their current systems to
accommodate the new compliance model. On this note, we bring you our impact analysis on something which is very
near and dear to us; or, rather to our stomachs –the restaurant and food industry. Here we will try to explain how the
restaurant bill will look under GST and whatare its implications for the end consumers the owners and the overall
industry.

1
Dr.Manjunath and et. Al (2016)

“Customer satisfaction in Fast food industry” . The objective ofthe study is to find out the key success factors for fast
food industry in region of mysore district andits aim is to find out the essential factors or determinants of customer
satisfaction in the restaurant industry of mysore district. The findings revealed that the service quality and physical
design are the key factors for satisfaction in fast food industry in my sore district.

Jonathan and et. Al (2017)

“ Impact of GST in hotel and restaurants”.The objective of the study is to how the restaurant bill will look under
GST , and what are the implications for the end consumers for the owner and the overall industry. The findings
revealed that hotels are liable for GST of 28% (14% CGST+14% SGST) as against the effective tax of
21%under present indirect tax regime.

Dash .A Volume 3 Issue 5 May 2017

“ positive and negative impact of GST on Indian economy”.The objective of the study is to cognize the concept of
GST , to study the features of GST , to furnish information for further research work on GST, to evaluate the
advantages and challenges ofGST . Credits of input taxes paid at each stage will be available in the subsequent stage
of value addition which makes GST essentially a tax only on value addition at each stage.

Alka Shah (2nd Nov 2017)

“Integrated Goods and services tax an Indian innovation” .The objective of the study is to cross utilisation of credit
is to be done and adjustments to be made between centre and states. The paper mainly focuses on the key provisions
for determining place ofsupply of Goods/services and nature of supply i.e interstate or intra -state.

Dash .A Volume 3 Issue 5 May 2017

“ positive and negative impact of GST on Indian economy”.The objective of the study is to cognize the concept of
GST , to study the features of GST , to furnish information for further research work on GST, to evaluate the
advantages and challenges ofGST . Credits of input taxes paid at each stage will be available in the subsequent stage
of value addition which makes GST essentially a tax only on value addition at each stage.

Alka Shah (2nd Nov 2017)

“Integrated Goods and services tax an Indian innovation” .The objective of the study is to cross utilisation of credit
is to be done and adjustments to be made between centre and states. The paper mainly focuses on the key provisions
for determining place ofsupply of Goods/services and nature of supply i.e interstate or intra -state.

1
 RESEARCH

METHODOLOGY

2
 INTRODUCTION OF RESEARCH METHODOLOGY

This chapter furnishes a precise of the research methodology used in the research of the application of Goods and
Service Tax (GST) to the Impact of GST on Hotel.

Redman & Mary (2001) defined research as a systematic compaign to gain new cognition. In fact, research also is
said as an art of scientific investigation. The research methodology is the fashion to figure out the research problem
and to acquire the info systematically. It is based on the most effective fashion to obtain useful info with a very
minimum price to acquire the consequence of an investigation. Besides that, it may understand as a scientific
discipline of poring over how research is done scientifically.

The aim of this chapter is to discourse the method used in the research. It is also a vital component in order to
achieve the objective of the decision, clear, accurate and reliable. In this chapter also, wecan see the step is generally
adapted to know how to collect analysis and interpretation of data. It covers the aspects of research contrive,
research process, population and sampling, data aggregationtechnique, development of instrument and data analysis
adopted. The purpose of this chapter are to describe the research methodology of this study, explain the sample
selection, describe the procedure used in designing the instrument and collecting the data, and provide an
explanation of the statistical procedure used to analyse the data. The questionnaire research method has been chosen
to determine the application and effect of Goods and Service tax(GST) to Impact of GST onHotel.

2
 RESEARCH DESIGN
Research design is defined as the logical and systematic approach in planning and directing a piece of research . It is
the overall plan of how the researcher intends to implement their projects in practice . It is also stated as the
arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the
research purpose in procedure. The purpose of research design is to insure that the evidence obtain enables us to
answer the initial objective clearly.

There are several types of research design and one of them is pre-experimental designs. The pre- experimental design
have three common designs that is one-short case study, one group protest to the post test design and intact group
comparison.

This research is flowing one short case study design. It depends one group is treatment and onlyone observation
is done. The one short case study means one group is exposed to the treatment, andonly post test is given to the
observation ormeasure the effect of the treatment on the dependent variable within the experimental group. Since it
is applied on a single group, there is no control group involved in this design. In this study, the independent variables
are General Insurance company such as insurer, customer and agents while dependent variables is goods and service
tax (GST) which is affected by independent variables, and to make sure there is any correlation relationship between
independent and dependent variables

DATA COLLECTION METHOD

Data is one of the vital aspects of any research studies. Every research is based on the data which is
analysed and interpreted to get information. There are two sources of data. Primary data collection applies
surveys, questionnaires, experiments or direct observations, secondary data collection may be conducted by
collecting information from a diverse source of documents or electronically stored information. In this
research paper, two data collection will be used which is primary data secondary data collection.

PRIMARY DATA

Primary data are the data which are accumulated from the field under the control and superintendence of an
investigator. Primary data means original data that have been collected specially for the purpose in the
mind. This type of data is generally a fresh and collected for the firsttime. It is useful for current studies as
well as for further studies. The collection data tool that has been chosen in this study is questionnaire. Most
of the previous researcher use the questionnaire as their data collection tool in the survey. The collections
of answer will gain through the questionnaire that had been answered by the insurer, customer and also the
ownersof the hotels in panvel.

The questionnaire was administered to a random company through google form and email to the company.
The used to questionnaire in this study does not meddle to the daily routine at the respondent’s since it took
them only several minutes to answer the questionnaire. A questionnaire has a list of enquiries whether in an
open ended or close ended for which respondents will give an answer according to their cognition. For this
survey the questionnaire using close ended question format, in which case the respondent is asked to
select an answer from among a list provided andfill in the answer on the response scale provided.

2
SECONDARY DATA

Secondary data are the data that have been already collected by and readily available from other sources.
Such data are cheaper and more quickly obtainable than the primary data and also may be available when
primary data can not be obtained at all. The researcher will find the secondary data when it is not possible
to collect the primary data. We can acquire secondary data based on the research that can be gained after go
through certain sources such as indicated source that have been printed or not. Basically, secondary data
provide the research to understand more about the topic and give clear view and prespective to your current
study.

Secondary data collected through various sources such as internet i.e.google.com, newspapers and also
GST books which refers by chartered accountants CA.

2
 GOODS AND SERVICES TAX ON HOTEL INDUSTRY

The head office located at Mohali is the leading assurance & consulting organization well positioned to assist GST in
India. It is a team of 400 people, 75 Professionals with industry background and experience. GST introduced in 1991
by replacing federal sales tax. Levy of GST ranging from 13% to 15% and other at 5%. Tax to GDP ratio first
increased and then decreased when rates we raised and then steady up down. GST introduced in 1985 is the peak rate
of 15%. InConstitutional bill in 2014 rate of taxes concessional 12% standard rate 17-18%, Luxury rate 40%.GST on
global outlook 31% to 36%.

The current position of hotels and tourism hits various taxes across the channel by VAT to output service tax and
luxury tax. The vat varies from state to state and lies between 12 to 14.5%.Similarlyluxury taxes depends on the
proportion of room tariff and usually scales between 0 to 12 %. Servicetax fluctuates depends upon the service
usually 8.7 of the total room tariff food rate differ from place to place. For food and beverage, 40 % of the bill
attracts the service and it comes to 5.8 percent when considered on total bill. For booking in hotels for occasions like
marriages, ceremonies and meetings an rebate of 30% is given and the effective service tax works out to 10.5% on
the total charges.

The structure of 5%, 12%, 18% and 28% of which the service sector will be taxed at 18 %. The 5

% slab on food proposed which is a positive of subsumed taxed for hotels and restaurants. However, the 18 % levy
on services or room revenue compared to neighboring countries, which charge a tourism tax between 4 to 7 % rules
out fair competition. The federation of Association inIndian tourism and hospitality has pointed out amendments to
the draft good and services tax lawthat supports exception for tourism and hospitality business. It has highlighted
that most nation recognize tourism as a critical economic driver and follow a Tourism Rate which is lower than
50%of the Standard Rate on other sectors.

How will GST work?

The new tax structure of GST will come into effect from April, 2017. Once this happens, all the state and central
taxes that are levied on goods and services such as excise duty, VAT, service tax, luxury tax, entertainment tax, etc.
will be incorporated within a single tax comprising two components, i.e. state GST and central GST. Each of these
taxes will be divided uniformly to form the GST rate. The anticipated rate of GST is likely to be 18 %. In the
present non GST rule, indirecttaxes on goods vary between 27 to 32% whereas those on services stand at 15 %.

How will it affect goods and services?

Post GST implementation, the cost of goods is likely to decrease and the cost of services is likely toincrease.
However, the overall pressure of taxes on consumers will reduce significantly. Purchase ofsmall cars, two
wheelers, movie tickets, groceries, and consumer electronics are likely to become cheaper for the buyers whereas
mobile phones, air tickets, and insurance premiums will witness price appreciation. Few exceptions to the GST bill
include alcohol, electricity, tobacco, and petroleum products

2
 IMPACTS ON HOTELS
1. Increased Tax Burden:

- The introduction of GST has led to varying tax rates for different categories of restaurants and hotels, ranging
from 5% to 28%. This may increase the tax burden on businesses compared to the previous tax regime.

2. Impact on Consumer Cost:

- Service tax levied on room tariffs and restaurant bills can drive up the effective consumer cost. This could
potentially reduce demand as customers may perceive higher prices.

3. Passing Costs to Consumers:

- Businesses may pass on the increased tax burden to consumers, leading to higher prices for accommodation and
dining services. This might adversely affect consumer spending and demand.

4. Complexity in Compliance:

- Adapting to the new tax structure and compliance requirements of GST might pose challenges for hotels and
restaurants, particularly for small businesses with limited resources for tax management.

5. Impact on Profit Margins:

- Higher tax rates and compliance costs under GST could eat into the profit margins of hotels and restaurants,
especially for those operating on narrow margins.

6. Uncertainty in Transition:

- During the transition phase from the previous tax regime to GST, businesses may face uncertainties regarding the
interpretation of tax laws, leading to potential compliance issues and financial setbacks.

7. Impact on Tourism and Travel:

- The incremental tax on air travel, though relatively low, could contribute to an overall increase in travel expenses.
This may deter some travelers and affect the hospitality industry's revenue from tourism.

8. Competitive Disadvantage:

- Hotels and restaurants in regions with higher GST rates may face a competitive disadvantage compared to those
in areas with lower rates. This could impact their ability to attract customers and maintain profitability.

9. Complexity in Input Tax Credit:

- While input tax credit is available for certain establishments, the complexity of claiming and managing it could
pose operational challenges for businesses, particularly smaller ones with limited accounting resources.

10. Impact on Economic Growth:

- Any adverse effects on the hospitality sector, including hotels and restaurants, could potentially ripple through
the broader economy, affecting employment, investment, and overall economic growth.

2
 SCOPE OF THE STUDY
GST shall cover all goods and services, except alcoholic liquor for human consumption, for thelevy of
goods and services tax. In case of petroleum and petroleum products, it has been provided that these goods
shall not be subject to the levy of Goods and Services Tax till a date notified on therecommendation of the
Goods and Services Tax Council.

Promulgation of GST Council: Proposed Article 279A of the Bill provides for constitution of Goods and
Services Tax Council to examine issues relating to goods and services tax and make recommendations to
the Union and the States on parameters like rates, exemption list and threshold limits. The Council shall
function under the Chairmanship of the Union Finance Minister and will have the State Union Minister as
its members.

All goods and services are covered under GST Regime except Alcoholic liquor for HumanConsumption,

Tobacco Products subject to levy of GST and Centre may also levy excise duty

GST Council yet to decide the incidence and levy of GST on following;

a) Crude Petroleum

b) High Speed Diesel (HSD)

c) Motor Spirit (Petrol)

d) Natural Gas

e) Aviation Turbine Fuel

SAMPLING:

My working area was a part of Panvel, Navi Mumbai. I have collected my data From restaurant within Panvel. As
we know that the person who engaged in restaurant sector who will be salariedor Owners. I have targeted the team
who engaged in GST i.e. tax department and persons who had impact on GST.

Sampling unit: My sampling unit included the persons who engaged in restaurant sector. Such as owner of
restaurant.

Size of sampling: Number of people surveyed. The sample consist branch owner, employees and customers from 10
Restaurant.

Sampling procedure: Data were collected using the personal contact approach. I talked to 10 restaurants Owner. I
met several employees and Owner who immediately identified with the concern expressed questionnaire is
distributed the information about GST application in their firm.

Tools and techniques: Under this project, in the questionnaire – like’s scale was employed to determine scores. A
like scale is psychometric scale commonly involved in research that employees questionnaires. It is the most widely
used approach of scaling response in survey research, such that the term is often used to interchange with rating scale
or more accurately the like’s scale, even though the two are not synonyms. The scale is named after its inventor,
psychologist Rensislikert. The statements/items for the questionnaire were formed after consulting relevant literature.
The survey questionnaire also included a section to capture the general profile of respondents. Theywere asked
about their environmental conditions, provide help from head quarters and customers response, etc.

2
LIMITATION OF THE STUDY

2
LIMITATION OF THE STUDY OF IMPACT OF GST IN HOTEL INDUSTRY
1. Data Availability and Reliability:

- Limited availability of comprehensive and up-to-date data specifically focused on the hotel
industry's performance and operations post-GST implementation.

- Reliability issues with data sources, including potential discrepancies or inaccuracies in official
government reports, industry surveys, and private sector data.

2. Scope Constraints:

- The study may be limited in scope due to constraints such as time, resources, and access to relevant information.

- Inability to comprehensively cover all aspects of the hotel industry's operations, including specific sub-
sectors, geographic regions, or types of accommodation providers.

3. Generalizability:

- Difficulty in generalizing findings to the entire hotel industry due to variations in business models,
market segments, and geographic locations.

- Limitations in extrapolating conclusions beyond the specific context of the study or applying them to
different types of hotels or regions with distinct characteristics.

4. Complexity of Variables:

- Challenges in isolating the direct impact of GST from other concurrent factors influencing the hotel
industry's performance, such as economic fluctuations, regulatory changes, and industry trends.

- Difficulty in quantifying the relative contribution of GST to observed changes in hotel pricing, revenue,
or consumer behavior amidst a complex set of variables.

5. Sample Size and Representation:

- Potential bias or limitations in the representativeness of the sample used for the study, particularly if it does
not adequately capture the diversity of hotels across different market segments, sizes, and locations.

- Small sample size may restrict the statistical power of the analysis and limit the generalizability of the findings.

6. Methodological Constraints:

- Limitations associated with the methodologies employed in the study, such as survey design, data
analysis techniques, and modeling assumptions.

- Potential biases or errors in measurement, sampling, or statistical inference that could affect the validity and
reliability of the study's conclusions.

7. Dynamic Nature of GST Implementation:

- The study may not capture the evolving nature of GST implementation over time, including changes in tax
rates, compliance requirements, and government policies affecting the hotel industry.

- Inability to account for future developments or revisions in GST regulations and their implications for the
hotel industry's operations and performance.

2
8. External Factors and Contextual Influences:

- External factors beyond the scope of the study, such as geopolitical events, natural disasters, or global
economic trends, may confound the analysis of GST's impact on the hotel industry.

- Difficulty in controlling for contextual influences that could shape hotel performance independently of GST-
related factors.

9. Bias and Subjectivity:

- Potential for bias or subjectivity in the interpretation of findings, particularly if the study is influenced by
the researcher's preconceptions, assumptions, or stakeholder interests.

- Efforts to mitigate bias through rigorous research design and transparency in reporting may be necessary
to enhance the credibility of the study.

10. Interpretation of Causal Relationships:

- Challenges in establishing causal relationships between GST and observed changes in the hotel
industry, particularly if the study relies on correlational or observational data rather than experimental
designs.

- Difficulty in determining the directionality and magnitude of causal effects between GST policies and
hotel industry outcomes.

2
DATA ANALYSIS & INTERPRETATION

3
Organization: 10 Hotels in Panvel

1. Is this your first Business related to Restaurant sector?

(a) Yes
(b) No

20.00%

Yes
No

80.00%

Interpretation:
80% of the Owner had the first business related to hotel sector and rest other 20% had other
industry.

3
 2. Do you enjoy what you do at your work?
(a) Yes
(b) No
(c) May be

25.00%

Yes
No
May
be

5.00%

70.00%

Interpretation:

70% of owners are enjoy their work which can they do, rest 25% said may be they enjoy their work
that means they said if conditions are satisfied according to them then they enjoy their work
otherwise not and remaining 5% are not enjoy their work because of unsatisfied targets.

3
 lOMoARcPSD|230 311 30

3. Are you satisfied with GST applying in your hotel ?

(a) Yes

(b) No

(c) May be

10.00%

15.00%

Yes
No

75.00%

Interpretation:

75% of the owner’s satisfied with GST applying in their organization, rest 15% are not satisfied
with GST and remaining 10% said that may be they were satisfied.
 lOMoARcPSD|230 311 30

4. How would you rate your overall experience about GST application in your Restaurant?

(a) Highly satisfactory

(b) Satisfactory

(c) Neutral

(d) Unsatisfactory

5.00%

20.00%
15.00%

Highly Satisfactory

Satisfactory Neutral

60.00%

Interpretation:

20% of the owners are highly satisfied with GST, 60% of the owners are satisfied with GST, rest
15% are neutrally satisfied with GST and remaining 5% are not satisfied with GST.
 lOMoARcPSD|230 311 30

5. Have your hotel received benefits after GST application?

(a) Yes

(b) No

(c) May be

20.00%

Yes
50.00%
No

30.00%

Interpretation:

50% of owners said that their restaurant received benefit after applying GST, rest 30% of restaurant
said that their restaurant are not received any benefits and remaining 20% said their restaurant may
be received benefits after applying GST.
 lOMoARcPSD|230 311 30

6. Is you have stress because of applying GST?

(a) Yes

(b) No

(c) May be

(d) Can’t say

8.00%

44.00% Yes
32.00% No

May be

16.00%

Interpretation:

44% of owners had stress because of applying GST, 16% of owners not have stress because of
GST, rest 32% of owners may be have stress and remaining 8% can’t say anything about that.
 lOMoARcPSD|230 311 30

7. Is your organization can provide awareness to your customers about GST application on
hotel industry?

(a) Yes

(b) No

Ye
s

100.00%

Interpretation:

Hotel Industry owners cannot provide awareness to their customers about GST application on their
hotel. Because it’s not the part of their business.
 lOMoARcPSD|230 311 30

8. How is the relationship between you and your co-workers?

(a) Good
(b) Bad
(c) Can’t say

8.00%

GOOD
BAD

CAN'T SAY

92.00%

Interpretation:

92% of owners have good relationship with his co-workers, rest 8% can’t say anything about that.
 lOMoARcPSD|230 311 30

9. Has your customers replied positively about GST application?

(a) Yes
(b) No
(c) May be

(d) can’t say

5.00%

20.00%

Yes
No

May be
Can't say

75.00%

Interpretation:

20% of the owners said their customers positively replied on GST application, 75% of owners said
their customers are not positively replied on GST and rest 5% said that may be their customers
replied positively on GST application in their firm.

)
 lOMoARcPSD|230 311 30

10. Is application of GST positively influence on your restaurant’s performance in

the market?

(a) Yes

(b) No
(c) May be

(d) Can’t say

5.00%

Yes
No

May be
Can't say

90.00%

Interpretation:

90% of the owners said that GST is positively influence on their restaurant’s performance in the
market, rest 5% said GST is not positively influence on their restaurant’s performance and
remaining 5% said may be GST positively influence on their restaurant’s performance.
 lOMoARcPSD|230 311 30

11. Is your working environment is safe because of applying GST?

(a) Yes

(b) No
(c) May be

(d) Can’t say

10.00%

5.00%

Yes
No

May be
Can't say

85.00%

Interpretation:

There are 85% of the owners said that their working conditions are safe because of applying GST,
rest 5% of owners said may be their conditions are safe and remaining 10% of owners can’t say
anything about that.
 lOMoARcPSD|230 311 30

CONCLUSION & SUGGESTION

 lOMoARcPSD|230 311 30

CONCLUSION
After the all above the information it’s proved that null hypothesis (H1) is going to be rejected
& (HO) the main hypothesis is to be proved that is it totally right after conducting a research on
the study of impact of GST on hotel industry

Companies which focuses on food and beverages could be the biggest beneficiaries of GST
within the hotel sector. This will help the consumers and also leads to savings. After
implementation of GST .it was found that the budget hotels are the most benefitted. The hotels
falling are GST under 18-28% GST slab bears the adverse effects of GST.

The solution for this is to reduce the “ARR-Average Room Rates”. The travellers look for budget
hotels as they provide cheaper accommodation. GST includes a uniform tax structure and through
this all the states have their own taxes. Before the restaurant industry was burdened with multiple
taxation. Now this duality of tax is removed. It also helps in improving the financial management.
Hopefully, GST will remove the problems faced by the hotel sector leading to cost optimization
and free flow of transactions.
 lOMoARcPSD|230 311 30

SUGGESTIONS
1.) Customer-slab rate policy have to take initiative by the government of India to cut the income
level differences among the low middle-class and low income group.
2.) As the hotels comprising of Non A/c compartments, the hotel have to fix a moderate rate of
GST as it suits the income needs of low-middle class and low income people
3.) The Allowances on GST rates in small-sized and moderate hotels as it encourages the low-
income and middle class people.
4.) In point of GST in hotel, especially for the alcoholic products like liquor should be taxed at the
highest slab rate compared to the current 18% GST rate on A/c restaurants.
5.) Reduce the cost of the food and beverage it encourages the low –income and middle class
people.
 lOMoARcPSD|230 311 30

BIBLIOGRAPHY
 lOMoARcPSD|230 311 30

BIBLIOGRAPHY
1) GST E- Book From www.GST.com.

2) www.slideshare.net.asandco,gst Jan 11, 2013. By Hirak Parmar.

3) www.gst.com

4) www.google.com

5) www.GST in india.com