As an outcome of the 47th GST Council meeting held in Chandigarh on June 29, many travel trade and other allied and associated industries like hospitality had expected a decline or even perhaps a better GST taxation in place. However, recommendations made to the Government by Group of Ministers on rate rationalisation leading to increase in taxes came as a surprise to these industries.
In a press release, the Travel Agents Association of India, TAAI, says that in a letter addressed to N Sitharaman, Minister of Finance, Government of India, Jyoti Mayal, President, TAAI expressed the industry’s frustration. She also conveyed that the industry was looking at the government to do away with taxes and extend support to travel, trade and hospitality industry which is yet to revive from the long crises.
However, imposing 12 pc GST on hotels priced below INR 1000 has come as the biggest jolt to both travel and hospitality industry, says the letter. Hospitality offered below INR 1000 drives the system and an increase at that level will take employment and business opportunities from many, wrote Mayal in the letter.
Vice President of TAAI Jay Bhatia specifically pointed out the increase in GST rate on payments by cheques from Nil to 18 pc. He said that the people in the travel industry work at the grass-root level and till today, in tier II and III cities the preferred mode of payment is by a financial instrument like cheque. Therefore, an increase in taxation of making and receiving payments will add a burden on both the agent and traveller, which may perhaps push travellers to move away from registered and legitimate agents to illegal business operators which is a matter of worry.
Referring to the increase from 12 pc to 18 pc on items such as printing, spoons, forks, machines for cleaning eggs, fruits and other products, Bettaiah Lokesh, secretary-general of TAAI said that the hike in taxation on such items would certainly lead to the increase in serving and servicing the end product. Lokesh adds that though they agree that there are a few points which are appreciable like exemption on the transport of passengers by air to and from NE states or hiring of trucks and goods carriage, increase in taxation has burdened the businesses exorbitantly.
Treasurer of TAAI Shreeram Patel states that TAAI’s long pending request to permit Input Tax Credits for Tour Operators booking hotels in other states vide, IGST, still remains unresolved. TAAI says that while GST was introduced to have uniform taxation and easy filing, and in addition to have a better understanding for both service provider and receiver regarding the taxation’s slabs. However, the increase and introduction of a tax on items directly related to travel trade and tourism, is spreading a negative sentiment amongst the businesses.