INDEX

CHAPTER NO. CONTENT PAGE NO.

Introduction 1-9

1.1) Background Of The Study

1.2) Literature Review

Chapter 1
1.3) Objective Of The Study

1.4) Need Of The Study

1.5) Research Methodology

1.6) Limitation Of The Study

1.7) Chapter Planning

Conceptual Framework, National And 10-15

International Scenario

2.1) Conceptual Framework

2.2) Basic Features Of GST

Chapter 2
2.3) Types Of GST

2.4) GST Objectives

2.5) National Scenario

 2.6) International Scenario
Chapter 3
Presentation Of Data, Analysis & Findings 17-36

3.1) Problems And Consequences Of GST

3.2) Data Analysis

3.3) Findings Of The Study

Chapter 4
Conclusions And Recommendations 37-38

4.1) Conclusion

4.2) Recommendation
Bibliography 39
Annexure 40-42
 CHAPTER 1
INTRODUCTION

Goods and Services Tax is an indirect tax which replaced all other indirect taxes in India. GST
officially introduced as The Constitution (One Hundred and First Amendment) Act, 2016. This
amendment introduced a national Goods and Services Tax (GST) in India from 1st July, 2017.
Goods and Services Tax is a comprehensive, multistage, destination-based tax that will be
levied on every value addition and at the time of supply of goods and services. GST offsets the
side effects of previous indirect taxes such as cascading effect, high-cost, inefficient tax
structure, tax avoidance and evasion, etc. GST is levied by both Central and State Government
and charged similarly as per their respective shares that shows the transparency in tax structure.
Components of GST

There are three applicable taxes under GST:

• SGST/UTGST: Collected by the State/Union Territory Government on an intra-

state/union territory sale (E.g. Within Gujarat/Delhi)

• CGST: Collected by the Central Government on an intra-state/union territory sale (E.g.

With Gujarat/Delhi)

1
 • IGST: Collected by the Central Government for inter-state sale (E.g. Gujarat to
Rajasthan)

• GST slab rates are 0%, 5%, 12%, 18%, 28% and out of which half of the share goes to
the respective State Government and the other half to the Central Government.

GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits
up to the retailer level. It is essentially a tax only on value addition at each stage, and a supplier
at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the
purchase of goods and services. Ultimately, the burden of GST is borne by the end-user (i.e.
final consumer) of the commodity/service. With the introduction of GST, a continuous chain of
set-off from the original producer’s point and service provider’s point up to the retailer’s level
has been established, eliminating the burden of all cascading or pyramiding effects of an indirect
tax system. GST taxes only the final consumer. Hence the cascading of taxes (tax-on-tax) is
avoided and production costs are cut down.

2
1.1 BACKGROUND OF THE STUDY

In the beginning, there was a fire at the hearth, a warm meal and a roof over one‘s head. Thus
begins the history of the hotel industry. People have been providing hospitality for weary
travelers since our ancestors inhabited the earth about 100,000 to 200,000 years ago. GST was
first introduced by France in 1954 and now it is followed by 140 countries. Most of the countries
followed a unified GST while some countries like Brazil, Canada followed a dual GST system
where tax was imposed by central and state both. In India also a dual system of GST is proposed
including CGST and SGST.

After three decades, reforms in the indirect tax system were reflected on 1st July, 2017 in India.
Goods and Services Tax is a single indirect tax with an aim of ‘one nation - one tax’ and is
applicable in the whole country. This present research work attempts to highlight the impact of
Goods and Services Tax on Indian Hospitality Industry. With the implementation of GST, the
Indian market will be unified and this will also lower the cost of business in the long run. The
hotel industry was burdened with multiple taxes on amounts charged for different services.
Additional charges on various activities of hotels were charged previously. But now in GST,
single tax is charged with clearly stated slab rates for various services. Slab rate increases with
increase in the amount of services charged i.e. for basic services rates are less and luxurious
services are under high GST slab rate.

3
1.2 LITERATURE REVIEW

● Abraham, A., & Dr. Mathew, T. (2019): found that Goods and Service tax system
will remove the defects of the indirect tax system and to have a one market in the nation.
After the revised rates were implemented Nov 15, 2017, majority of the hoteliers have
expressed faith in the system. Even though the majority of hotels have incurred
additional costs in transitioning towards the new system, it is expected that in the long
run GST will prove beneficial and make the fantasy of "One Nation One Tax"
materialize.
● Akshay R. Rakhunde, Dr. Priti Rai. (2019) examined the influence of GST on hotel
industry, Nagpur. The study was chosen for a 3 star, 4 star, 5 star hotel in Nagpur. The
study found that GST helps in improving the financial management and minimizes the
problem for the hotel community leading to cost increase and free flow of negotiation.
The study concluded that maximum hoteliers in Nagpur are supporting GST.
● Aswathy Krishna & Divya. M.S, Aashish C.I (2018) assessed the influence of GST
on the hotel industry. The study found that after implementation of GST, the budget
hotels are the most benefited one. It also found that the hotels falling under 18-28% GST
slab bear the adverse effects of GST. The study concluded that GST removes the
problems faced by the hotel sector leading to cost optimization and free flow of
transactions.
● Faizanbhai (2019) in his paper entitled “Impact of GST on various aspects of restaurant
and hotel business in Anand and Nadiad District in Gujarat state”, concluded that hotel
and restaurant profit remains constant even after the implementation of GST. There is a
neutral impact on compliance cost, and negative impact on budget and financial position
and requirement of working capital for hotel business, he felt.
● Nitin Kumar (2020) made a study on the “Customers Perception towards Goods and
service Tax (GST) in Jind region of Haryana”. He found that good understanding among
customers is important as it can generate a positive perception towards the taxation
policy. So the researcher suggested that the Government has to put in more efforts to
ensure that consumers have a clear understanding and can develop a positive perception
towards GST, leading to its acceptance.

4
1.3 OBJECTIVES OF THE STUDY

● To review the concept of Goods & service Taxation structure in India.

● To examine the pros and cons of GST with respect to the Hotel Industry.
● To analyze the positive or negative influence of GST on Hotel Industry
● To evaluate the customer satisfaction by observing the impact on customers buying
behavior.
● To examine the effective rates and its council composition.

5
1.4 NEED OF THE STUDY

The Hotel Industry is burdened with taxes at every point i.e. right from the purchase of raw
materials till sale of services and goods. GST rates are more on high room tariffs and issue in
compliance of GST rates on various services provided by hotels. Challenges are faced by the
hoteliers with respect to GST rates charged to customers’ variable on different services. Another
important reason for this study is to stop hoteliers from cheating their clients and on other hand
also to examine the problems faced by them in compliance with the system and their perception
regarding the GST implementation and its effect on their business.

6
1.5 RESEARCH METHODOLOGY

1. Data collection methods: The source of data includes primary and secondary data
sources.

Primary Sources: Primary data has been collected directly from sample respondents
through questionnaire and with the help of interviews.

Secondary Sources: Secondary data has been collected from standard textbooks,
Newspapers, & internet.

2. Research Instrument: Research instrument used for the primary data collection is
questionnaire.
3. Sample Design: Sample design is a definite plan determined before any data is actually
obtained for a sample of 57 from a given population.

Sample Size: 57 Respondents

Area of Study: Kolkata

4. Period of Study: 2 months.

5. Tools used: Bar graphs, tables and pie charts are used as tools in the study.

7
1.6 LIMITATIONS OF THE STUDY

1. Research has been limited to 3 star hotels.

2. Techniques and tools are conventional therefore it has inherent limitations.
3. The study is subject to general human limitations.
4. Unavailability of desired information regarding the working style of key persons and
their efficiency.
5. Staff members are uncomfortable in sharing information.
6. The study is based on a particular time period; hence conclusions can vary sometimes.

8
1.7 CHAPTER PLANNING

My study has been divided into following chapters:

CHAPTER 1 INTRODUCTION: This chapter covers the Background, Literature Review,

Objectives, Research Methodology, Limitations of the Study and Chapter Planning.

CHAPTER 2 CONCEPTUAL FRAMEWORK: This chapter covers conceptual framework

of the topic of Project

CHAPTER 3 PRESENTATION OF DATA, ANALYSIS AND FINDINGS: Company

Profile, Presentation of Data, Analysis and Findings are present in this chapter

CHAPTER 4 CONCLUSION AND RECOMMENDATIONS: in this chapter, the

conclusion based on the main findings and recommendations is provided.

9
 CHAPTER-2

CONCEPTUAL FRAMEWORK

NATIONAL SCENARIO AND INTERNATIONAL SCENARIO

2.1 CONCEPTUAL FRAMEWORK
India, as one of the biggest democracies in the world, follows the federal tax system for levy
and collection of various taxes. Different types of indirect taxes are levied and collected at
different points in the supply chain. The Centre and the States are empowered to levy respective
taxes as per the Constitution of India. The Value-added tax (VAT), when introduced, was
considered to be a major improvement over the pre-existing central excise duty at the national
level and the sales tax at the state level. Now the Goods and Service Tax (GST) has been a
further significant breakthrough – the next logical step towards a comprehensive indirect tax
reform in the country.

The Goods and Services Tax (GST) has been the biggest and substantial indirect tax reform in
India since 1947. The main idea of GST was to replace the then existing taxes like value-added
tax, excise duty, service tax and sales tax. GST as it is known as all set to be a game changer
for the Indian economy.GST was launched at midnight on 1st July 2017 by the president of
India, Pranab Mukherjee and Prime Minister, Narendra Modi. The launch was marked by a
historic midnight session of both houses of the Parliament convened at the central hall of the
Parliament.

The 122nd Amendment Act Bill sought to amend the constitution to introduce the GST wide
proposed new article 246A. This new article gave power to Legislature of every state and
Parliament to make laws with respect to GST where the supplies of goods or of services take
place. GST has been applicable throughout India, and has replaced multiple cascading taxes
levied by the Central and State Government.GST is levied at all stages right from
manufacture/import of goods up to final consumption with credit of taxes paid at previous stages
available as credit against output tax liability arising out of the outward supply (popularly
known as seamless flow of credit of taxes). In a nutshell, only value addition is to be taxed and
burden of tax is to be borne by the final consumer.

10
2.2 BASIC FEATURES OF GST

The salient features of GST are as under:

1. GST would be applicable on sale of goods and services as against the present concept
of tax on the manufacture of goods.
2. GST would be destination based tax as against the present concept of origin based tax.
3. It is a dual GST. The GST levied by the Centre would be called Central GST (CGST)
and that to be levied by the states would be called State GST (SGST).
4. An Integrated GST (IGST) would be levied on inter-state supply of goods or services.
This would be collected by the center.
5. GST would replace the following taxes currently levied and collected by the Centre:
a. Central Excise Duty (including additional Duties of Excise)

b. Service Tax.

c .CVD (levied on imports in lieu of Excise Duty)

d. SACD (levied on imports in lieu of VAT)

e. Central Sales Tax (CST)

f. Excise Duty levied on Medicinal & Toiletries preparations.

g. Surcharges and cesses.

6. State taxes that would be subsumed within GST are:

a. VAT/ Sales Tax
b. Entertainment Tax
c. Luxury Tax
d. Taxes on Lottery, betting and gambling’s
e. Surcharges & Cesses

11
2.3 TYPES OF GST

Hence, you can say that there are four types of GST:

1. Central Goods and Services Tax

2. State Goods and Services Tax
3. Integrated Goods and Services Tax
4. Union Territory Goods and Services Tax

CGST full form is Central Goods and Services Tax.

CGST refers to the Central GST tax that is levied by the Central Government of India on and
transaction of goods and services tax taking place within a state.

SGST full form is State Goods and Services Tax.

SGST refers to the State GST tax that is levied by the State Government of India on and
transaction of goods and services tax taking place within a state.

IGST full form is Integrated Goods and Services Tax.

Integrated GST (IGST) is applicable on interstate (between two states) transactions of goods
and services, as well as on imports. This tax will be collected by the Central government and
will further be distributed among the respective states.

UTGST full form is Union Territory Goods and Services Tax.

The Union Territory Goods and Services Tax, commonly referred to as UTGST, is the GST
applicable on the goods and services supply that takes place in any of the five Union Territories
of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh,
Lakshadweep and Daman and Diu. This UTGST will be charged in addition to the Central GST

(CGST) explained above. For any transaction of goods/services within a Union Territory:
CGST + UTGST.

12
2.4 OBJECTIVES OF GST
1. To eliminate the cascading effect of indirect taxes on single transaction-The basic
objective of GST is to remove the cascading effect of the taxes. Cascading effect of taxes mean
levy of tax on tax.

2. To subsume all the indirect taxes at the center and state level- Barring few indirect taxes,
all the major indirect taxes by central and state governments have been subsumed into GST.

3. To reduce the tax evasion and corruption- GST would help in curbing of tax evasion and
reduce corruption in tax department. In the system of GST, there would be less chance to claim
false input tax credit as it requires matching of invoices between recipient and the suppliers.

4. To increase productivity- GST would help in increasing the enterprise productivity and
efficiency. Under the previous tax regime, there were many constraints relating to logistics and
impractical procedures regarding claim of input tax credit.

5. To achieve the policy of one nation one tax- There is a single and neural tax in most cases
so there would not be any differences in the tax rates between one states to another state. In this
way GST law has achieved the policy of one nation one tax.

13
2.5 NATIONAL SCENARIO

Dual GST is applicable in India. There are four types’ taxes under dual GST:

● IGST (Integrated Goods and Services Tax): UNDER GST, IGST is a tax levied on
all Inter- State supplies of goods and services and will be governed by the IGST Act.
IGST will be applicable on any supply of goods and services in the both cases of import
into India and export from India. Under IGST exports would be zero rated, tax will be
shared between the Central and State Government.
● CGST (Central Goods and Services Tax): CGST is a tax levied on Intra State supplies
of both goods and services by the Central government and will be governed by the CGST
Act. SGST will also be levied on the same Intra State supply but will be governed by
the State Government. This implies that both the Central and State governments will
agree on combining their levies with an appropriates proportion for revenue sharing
between them.
● SGST (State Goods and Services Tax): SGST is a tax levied on Intra State supplies
of both goods and services by the State Government and will be governed by the SGST
Act. As explained above, CGST will also be levied on the same Intra State supply but
will be governed by the Central Government.

Under SGST any tax liability obtained under SGST can be set off against SGST or IGST input
tax credit only.

● UTGST (Union Territory Goods and Services Tax): UTGST is just similar to
SGST. The only difference is that the tax revenue goes to the treasury for the respective
administration of union territory where the goods and services have finally been
consumed. There is a key difference between union territory and states. The Union
Territory directly comes under the supervision of the Central Government and does not
have its own elected government as in case of State. UTGST is also charged aT the same
rates that of CGST. But, among UTGST or SGST only one at a time shall be levied
together with CGST in each case.

14
GST RATES APPLICABLE ON HOTEL INDUSTRY

Sl. No. Room Rent GST Rate

1 INR 1 to Rs. 1,000/- 12% GST from 18th July 2022

per day

2 Rs. 1,001/- to Rs.
7500/- per day
12% GST
(Accommodation, food and beverage services) –
“Supply of “hotel accommodation” having a value
of supply of a unit of accommodation above one
thousand rupees but less than or equal to seven
thousand five hundred rupees per unit per day or
equivalent.”

18%
3 INR 7501 per day or
more

• Restaurants: GST rate is 18% on AC restaurants within hotels but opted for composition
scheme where takeaway is available then GST rate is 5%.

• Banquets: The GST rate on banquet halls is 18%.

• Other Services: GST rate on services like laundry, doctor on call, spa, etc. is 18%. But GST
rate is 5% on services like car rentals, cab, etc. provided by hotels

15
2.6 INTERNATIONAL SCENARIO

GST was first levied by France in 1954. Today, Malaysia is the most recent country to join the
bandwagon. In countries where GST has been adopted, manufactures, wholesalers, retailers and
services providers charge GST at the specified form consumers and claim input credits for GST
paid by them on procurement of goods and services (raw material). Under GST input tax credit
is provided throughout the value chain for creditable acquisition. Different countries follow
different models of GST based upon their own legislative and administrative structure and their
requirements.

Main objective: Simplification of tax structure

First Levied by: France (1954)

Number of Countries that have GST: More than 140

Latest inclusion: Malaysia (2018)

● Central GST: In this mode of GST, tax is collected by the Central Government for all
the transactions across the country. Later it is being distributed among all the respective
State Governments. The State Government has nothing to do with it. Countries like
Canada, Vietnam use this model.

● Independent GST: In this model tax is collected by the State Government for all the
transactions across the country. The Central Government has nothing to do with it.

● Dual GST: In this mode tax is collected by both Central and State Government. The
dual GST model or the dual GST structure means levying tax with two different taxation
components. In India, both the Central Goods and Services Tax and the State Goods and
Services Tax are the components levied on a single transaction within a state due to its
federal nature.

16
3.3 FINDINGS OF THE STUDY

After going through the project data and collected data I found that

1. 57% of the respondents are Male, and 43% of the respondents are Female.

2. 1.8% of the respondents are in the age group of below 18, 10.5% of the respondents are
in the age group of 19-25, and the rest 87.7% are in the age group of 26-25.

3. 78.9% of the respondents are in the occupation of students, 3.5% are self-employed,
15.85 are service and the balance 1.8% are any other.

4. 75.4% of the respondents think that after GST Price to Customer Has Increased, 10.5%
of them think that Price to Customer Has Decreased, and remaining 14% thinks that Price
to Customer Has Remained Neutral.

5. According to 59.6% of the respondents, reason behind Influencing Price Decision was
GST Rate, 7% of the respondents thinks that Tax Credit Procurement was the reason, 8.8%
of the respondents think that Supply Chain Efficiency was the reason, 17.5% of them thinks
that Vendors Not Passing on Tax Credit was the reason, and remaining 7% of them had
selected the option None of the above.

6. 66.7% of the respondents think that government has taken Adequate Steps in Response
of need of Hotel Industry, and remaining 33.3% thinks that government has not Adequate
Steps in Response of need of Hotel Industry.

7. 66.7% of the respondents are satisfied with the Time given to Assesses to Implement
the GST Council Decisions, 33.3% of the respondents are not satisfied.

8. 19.3% of the respondents think that Better Industry Outreach was the option which
government could have done better, 43.9% of them thinks that Proper Training of GST
Officers was the point in which government could have done better, 31.9% of them thinks
that More Transparency of Findings was the point in which government could have done
better and 5.3% of them have selected None of the above.

35
9. 80.7% of the respondents are satisfied by the Deadline given for the GST Compliance,
and 19.3% of them are not satisfied.

10. 93% of the respondents think that GSTIN Return Filing Portal could have been made
more effective, and 7% of them think that it is ok.

11. 64.9% of the respondents are not clear about the Anti-Profiteering Provisions of GST,
35.1% of them are clear about it.

12. 43.9% of the respondents think that GST has Impacted Profit Negatively, and remaining
56.1% of them thinks that GST has Impacted Profit Positively.

13. 21.1% of the respondents think that the Tax Structure of GST is more complicated than
before and the remaining 78.9% thinks that the Tax Structure is not as complicated as before.

14. 75.4% of the respondents think that Transition Provisions Addressing Majority of their
Concerns, and the rest 24.6% of them think that Transition Provisions are not Addressing
Majority of their Concerns.

15. 59.6% of the respondents think that Burden of Compliance has increased after
Implementation of GST, and the remaining 40.1% of them thinks that Burden of
Compliance has not increased.

16. 80.7% of the respondents think that GST has made a Positive Impact on Hotel Industry,
remaining 19.3% thinks that GST has not made any Positive Impact on Hotel industry.

36
 CHAPTER: 4

CONCLUSION AND RECOMMENDATIONS

4.1 CONCLUSION

Hotels are benefited in food and beverages area and also this system is beneficial for budget
hotels which are under slab rate of 12%. But hotels that comes under 18-28% slab rate facing
adverse effects of GST. With the above objectives determined, we can conclude that there is
significance relationship between level of customer satisfaction and change in their buying
behavior after implementation of GST in hotel industry. There is clarification of customers
regarding GST rates and have clear picture of taxes they pay for the service consumer in hotels.
There is a significance relationship between the clarity customers having about GST rates in
hotel industry and issues faced by hoteliers in handling their customers. This enhances the
revenues of government as it will increase consumer consumption of hotels and which in turn
increases the employment opportunities in hotel industry. With this positive impact, hoteliers
facing some issues financially while dealing with their customers.

37
4.2 RECOMMENDATIONS.

The government can Modernizing the Input Tax Credit (ITC) system and unblocking working
capital method that the government could consider is allowing conversion of the accumulated
input tax credit into tradeable scrips in the market. This would help free up the working capital
and mobilize unproductive assets in the financial statements of businesses.

Simplifying and rationalizing of ITC provisions

Dispute resolution

A National Bench of Advance Ruling was proposed to be set up to resolve conflicting rulings
rendered by various states. However, this body is yet to be formed. In the interim, the GST Law
Committee should consider proactively reviewing areas with such conflicting rulings and
proactively clarify to avoid continued litigation and a pile-up of cases at High Courts

Goods and Service Tax was considered to be an epitome of the ideal tax mechanism at the time
of its implementation. The assumption is somewhere proved right as the GST system has
reduced effective tax rates and boosted supply chain efficiencies of businesses. On the other
hand, it is also prevalent that the system is not at all simple and has burdened the taxpayer even
more with tax-filing complexities.

Now it is invariably needed to introduce a set of amendments contributing towards the certainty
of the GST system.

Steps to Make GST More Compliant:

• Reduction in Number of Tax Slabs Rates

• Effortless Input Tax Credit Claims

• Spreading the GST Net

• Practical Targets for GST Collection

• Including Some Exempted Goods in GST Regime.

• Let E-waybill Go Away.

38