Industry awaits clarity on GST

South India Travel Award 2017 winners deliberate on challenges ahead owing to the 28 per cent GST slab for hotels with per day tariff of ` 5000 and above. As many factors weigh on the minds of these industry stalwarts, TRAVTALK finds out roads that can be

Best Metropolitan Hotel – Ramada Chennai Egmore Reconsider a single tax slab for hotels

The industry was severely impacted by the liquor ban and GST rates have come as another speed breaker to the industry’s growth, believes Animesh Kumar, Corporate General Manager, Ramada Chennai Egmore. “Before GST, the luxury and service tax was at about 19 per cent and this has now gone up to 28 per cent. While GST is a gross tax and there is going to be input credit, the cost for hotel companies g goes up py by almost 10 per cent. At best there should be one or two slabs of either 12 per cent or 18 per cent t to create a level playing field for hotels,” says Kumar. He further elaborates that banqueting will g gain the most under GST. As of today banquet taxes are 23-25 per cent and GST at a lower rate o of 17-19 per cent will be a shot in the arm for this segment. “Another worry of the

hotel industry is the non-inclusion of electricity and alcohol tax in GST,” adds Kumar.

Best Airp Airport –Kempegowda International Airport, Bengaluru Air trav travel to become costlier under GST

With 18 per centcen GST for aviation tion sector as against the 15 per cen cent currently, air travel is expected to beco become costlier, exp explains Girish K, Ge General Manager-Tax Taxation, Finance & Accounts, Kempegowda pe International tion Airport, Bengaluru. gal “The airport sec sector was seeking exe exemption or full input put credit for taxes on infrastructure development which has been denied under GST and th the 18 per cent tax cap is a considerable financial burden,” he says. Though Girish welcome welcomes the GST regime, he also points out that for the high-end hotels, capping GST rate at 1 18 per cent would’ve been better than levying 28 per cent tax on them.

Best Hotel and Resort Management Company – Tatva Hospitality ImplementationImpl of GST is key

The tourism and hospitality is still recovering from the effects of demonetisationdemo and GST is the second blow in a row for theth stakeholders, informs ManojMa Kunisseri, Chief ExecutiveExe Officer, Tatva Hospitality.Hosp Kunisseri though applaudsappl GST as a move to bringbr in uniformity of taxes, he points that the success of GST depends on how it is implemented. “I feel the hospitalityh industry will be hit because of the high percentage tax slabs announced. We deal with majorly leisure properties and 28 per cent on the published rate is a steep jump forfo us. Luxury tax in Tamil Nadu is only 21 per cent but with GST the tax amount increasesincrea by 7 per cent. I don’t think that ` 5000 is luxury; we call it mid-budget and levyinglevyi high percentage of tax on these properties will have a negative impact on tourism,”tou says Kunisseri. He urges the government to reconsider capping hotels with per-daype tariff of ` 5000 as luxury properties or lower the tax rate from 28 per cent.

Best Debut Hotel – Holiday Inn Chennai OMR IT Expressway Segmentation of hospitality products to become a challenge

GST comes with an aim to simplify tax structure and the hospitality sector will also reap the benefits of standardised and uniform tax rates, opines Shipra Sumbly Kaul, General Manager, Holiday Inn Chennai OMR IT Expressway. Kaul feels that it is a mixed bag of simple tax structure, easier rules, and increased costs and compliances. “The hotel industry is a complex business with multiple levels of selling, products and different types of services such as MICE, restaurants and rooms with various price brackets. We are waiting to get a clear picture on the terms as it might get complicated for hotels to bifurcate their offerings,” she says. Hotels also directly impact the economy and the industry is yet to see the impact of GST and how it is implemented, adds Kaul.

Best Executive Hotel – Howard Johnson Bengaluru Hebbal Stand-alone hotel brands to suffer under GST

GST was introduced to ease administrative work (as it eliminates other taxes levied by hotels) and in turn, was aimed at streamlining the taxation process. It will be interesting to see how different hospitality brands respond to it in the long run, believes Rishi Neoge, General Manager, Howard Johnson Bengaluru Hebbal. “While reviewing the rates, we realised that we may have to bear the higher costs, which in turn could disappoint our patrons. Travel plans are going to change for the general audience as well as the corporates in the long run,” says Neoge. He further points out that in Karnataka, all growing hotel brands that have been paying VAT so far will now have to pay 12 per cent GST which would definitely be an issue for them, and moreover, stand-alone hotel brands in the South will also be impacted.

Most Enterprising General Manager – Shuvendu Banerjee Clarity needed on GST implementation

Implementation of GST will transform the tax regime in the country and do away with multiple taxation structure, feels, Shuvendu Banerjee, General Manager, Crowne Plaza Kochi. He says, “Unfortunately tourism and star hotels are viewed as a luxury segment by the authorities and have been put under the highest tax bracket of 28 per cent under GST. This would further make holidays to India and travel in general costlier.” Banerjee further explains that as far as procurement of hotels is concerned, GST would positively impact with the abolition of multiple taxes, excise duty, especially for a consumer state like Kerala. “We need to establish clarity on the application of GST in hospitality domain, primarily on the treatment of the same for room rents. Currently our understanding is that GST will be levied on the actual transaction value of rooms and not on the published or declared tariff,” he adds.