A STUDY OF GST IN HOTEL INDUSTRY

Presented by:
Ms. Babita Bhalla, Student, DSPSR, Delhi
Mr. Vatsal Srivastav, Student, DSPSR, Delhi

Dr. Anupama Lakhera

Associate Professor
DSPSR – Rohini
Delhi
 INTRODUCTION

 The Goods and Services Tax (GST) makes the tax structure simple to support in
the economic development and growth of a country. The Goods and Services
Tax Bill or GST Bill, 2014, is an indirect or Value added Tax which has been
implemented at national level in India. GST is to be implemented to bring
about a uniform tax structure at all the stages of production.
 The bill to introduce The Goods and Service Tax (GST) was passed in Rajya
Sabha, the Upper House of Parliament in India on 3rd August 2016. GST was
implemented from 01st July 2017. It is considered as one of the biggest fiscal
reform in India since 1991, when the liberalization policy was implemented. GST
bill was passed with unanimous approval.
 GST has led to consolidation of Central and State taxes into a single tax
payment system. In GST system, the consumer pays the final tax but an
efficient input tax credit system ensures that there is no cascading of taxes- tax
on tax paid on inputs that go into manufacture of goods.GST would reduce
the tax burden on consumers, which is currently estimated at 25-30%.
 DEFINITION

“The Goods and Services Tax (GST) is a value-added tax levied on most
goods and services sold for domestic consumption. The GST is paid by
consumers, but it is remitted to the government by the businesses selling
the goods and services. In effect, GST provides revenue for the
government”
 OBJECTIVES OF STUDY

To highlight the importance of Good and Services Tax

(GST).

To study the Good and Services Tax (GST) in hotel industry.
 RESEARCH METHODOLOGY

The present study is based on secondary data. The

data has been extracted from various sources like
research articles and different websites.
Other sources – Newspapers, Magazines and
books.
HOTEL INDUSTRY UNDER GST REGIME

The hotel sector will reap the benefits of standardized and

uniform tax rates under the Goods and Service Tax, and easy
and better utilization of input tax credit. The final cost to end
user will also decrease; this may help the hotel industry to
attract more overseas tourists than before. This would result in
improved revenues for the government and help in
economic growth. There are many advantages of GST
regime which could help in the growth of hotel industry in the
long run. For instance, complementary food (like breakfast)
was earlier taxed separately under VAT, but now it will be
taxed under GST as a bundled service. The GST rates for hotel
industry are given in detail below:
 HOTEL INDUSTRY UNDER GST REGIME

The GST rates for hotel industry are given in detail below:
 ADVANTAGES OF GST

Administrative Ease:
GST has led to the abolishment of other taxes like VAT etc. This
has helped to streamline the taxation process. When the service
tax was first introduced, it had a lot of complexities. GST has very
clear guidelines for implementation in each industry.

Clarity for Consumers

For the consumers, it was sometimes difficult to differentiate
between a Value Added Tax and an entertainment tax.
However, GST will help customers to see only a single charge on
their bill and this will give them a clear picture about the tax they
need to pay.
 ADVANTAGES OF GST

Improved Quality of Service

There might have been times when you had to wait in the hotel lobby
for your bill to be prepared while wondering if you might miss your
flight? The checking-out process at hotels might become easier with
only one tax to compute, which will benefit the hotel industry and
improve their service.

Availability of Input Tax

It will now become easier for the tourism and hotel industry to claim
and avail input tax credit (ITC) and get full ITC on their inputs. Before
GST, the tax paid on inputs (raw edibles for food, cleaning supplies
etc.) was difficult to adjust against the output without any
complications. However, this will now become easier with the
implementation of GST.
 DISADVANTAGES OF GST
Increased Technological Burden
Implementation of GST will increase the technological burden on
businesses as they will have to become technologically adept for
implementing GST.

Increased Costs
This will also lead to an increase in the cost for compliance. Businesses
may try to recover the additional cost of technology and new systems
from their customers, which might lead to higher tariffs in some cases.

Lack of Parity with Asian Counterparts

India is becoming a bigger player in the global hotel and tourism industry,
therefore hotels need services to be at par with global rates. Some Asian
countries like Japan and Singapore have very low tax rates for their hotel
sector (8% and 7% respectively) which is an important reason for them
ranking high on tourist wish lists. India is a global tourism hotspot, but it still
loses out on the backpacker crowd due to these high rates.
 CONCLUSION

 GST imposed on hotels is somewhere good and to some extent

bad. It is found that after imposition of tax i.e. GST the basic room
rate has decreased. GST is being imposed @ 18%. For luxury room
with complimentary breakfast, the rates have risen up. GST is
being imposed @28%.

 Thus we can say that impact of GST on hotels will be negative or

positive depending on the rate as well as the state in which the
property is located. It is important for hotels to offer unique
discount schemes to the customers in the current scenario.
 CONCLUSION

GST includes easier rules and regulations plus increased costs and
compliances. The Hotel and Restaurant Association of Western India
had been lobbying for a lower GST rate of 5% to bring in more
tourists and allow Indian businesses to compete with other global
hotel chains. However, the GST Council set the rate at 18%.

In India the Tourism and hotel industry is expected to grow to US$
280.5 billion by 2026, and the initial setbacks after GST
implementation are highly unlikely to stop this growth. However, it
still remains to be seen whether the pros of GST tax will outweigh the
cons for hotel sector.
THANK YOU