Hoteliers cheer tax reduction

Hotel owners and operators on Friday welcomed the goods and services tax (GST) rate cut on room tariffs.

According to Dipak Haksar, chairman of CII National Committee on Tourism & Hospitality, the move will create a positive sentiment across travel, trade and hotel industry. “The GST rate rationalisation is an extremely positive development, which augurs well for the Indian tourism industry. We are grateful… for considering this demand of the industry,” he said.

Zubin Saxena, managing director and vice-president for operations, South Asia, Radisson Hotel Group, said the widening of 12 per cent GST bracket to a large number of hotels will ease off pressure on hoteliers.

Industry stakeholders said the move is in line with the government’s stated objective of turning India into a tourist hub. Prime Minister Narendra Modi, in his latest Independence Day speech, had urged people to visit tourism destinations in India, rather than travelling abroad.

“This adds great spurt and momentum to the hospitality industry,” said Nakul Anand, chairman of industry body Federation of Associations in Indian Tourism & Hospitality, and executive director of ITC.

The good and the bad for cola makers

Friday’s decision brought both good and bad news for the makers of aerated drinks like Coca-cola and Pepsico India. The GST rate on caffeinated drinks has been hiked — from 18 per cent to 28 per cent — to bring it on a par with the rate on sugary aerated drinks. Moreover, a 12 per cent compensation cess has been levied on them, which will effectively take the tax rate to 31.36 per cent.

Because of this, products like Thums Up Charge and Red Bull will now attract significantly higher GST. While companies are yet to respond, industry sources said their prices may go up.

However, removal of compensation cess on all manufacturers of aerated drinks brought some breather for beverage majors. While, earlier a 12 per cent compensation cess was levied on supply items of aerated drinks like Coca-cola, Pepsi and Limca, now their makers will not have to pay the additional cess. Krishan Arora, partner, Grant Thornton India, said this would reduce tax burden on these firms and may help them cut price of certain aerated drinks.

Removal of compensation cess on all manufacturers of aerated drinks brought some breather for beverage majors