1 year of GST: Sore still?

The Goods and Ser­vices Tax (GST) came into ef­fect in July 2017 and shook the en­tire travel in­dus­try. While many said that it sim­pli­fied pro­cesses, oth­ers be­lieved that it de­vi­ated from the ‘One na­tion One tax’ idea.

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A lot of pos­i­tive changes have taken place af­ter the im­ple­men­ta­tion of GST in the coun­try. As far as the tourism and hos­pi­tal­ity in­dus­try is con­cerned, a lot more has to hap­pen in the com­ing days. Both IATO and the Min­istry of Tourism are work­ing to take the is­sues to the GST Coun­cil and Fi­nance Min­istry to avoid mul­ti­ple taxes known to tour op­er­a­tors and trans­port op­er­a­tors. We are very these is­sues very soon to re­solve the con­fu­sion around GST.

GST is a great sys­tem brought in haste with­out train­ing and devel­op­ment. While 5 per cent GST on tour op­er­a­tor ser­vices was a wel­come move by most quar­ters, the gov­ern­ment must sep­a­rately deal with in­bound and out­bound tour op­er­a­tor ser­vices. Out­bound tour op­er­a­tors are im­pacted in a big way in com­pe­ti­tion with in­ter­net book­ings where one does not have to pay any GST. Over­seas book­ings for only ho­tels are also im­pacted due to GST. GST should be im­ple­mented on our ser­vice charge and not on ser­vices pro­duced and de­liv­ered in an­other coun­try.

2017 was not a very good year for tourism as most of the in­dus­try was try­ing to re­cover from de­mon­eti­sa­tion and the im­pli­ca­tions of GST. We would like to get the in­put credit on the GST be­ing charged by other ser­vice providers to tour op­er­a­tors. We have also asked the gov­ern­ment to ex­empt GST on all for­eign ex­change earned from in­ter­na­tional tourists. With some is­sues of GST hav­ing been re­solved, I still feel that the taxes is mak­ing the In­dian tourism prod­ucts more ex­pen­sive than the neigh­bour­ing coun­tries.

GST has made a big im­pact on in­ter­na­tional con­fer­ences. This has af­fected the busi­ness where most of the for­eign or­gan­i­sa­tions don’t want to pay the GST. Right now, they can­not take the in­put tax credit at the mo­ment. How­ever, good news is that Min­istry of Tourism is work­ing on that, be­cause we at ICPB, have given them a back­ground on how this busi­ness has af­fected us. I hope they come out with a so­lu­tion for our woes with GST and work to­wards ra­tio­nal­is­ing it.

GST still needs proper im­ple­men­ta­tion and not ev­ery­one in the in­dus­try can claim that he un­der­stands how it tourism and hos­pi­tal­ity in­dus­try. The process to claim and avail in­put tax credit is clear with some ad­just­ments and gov­ern­ment sup­port. GST in­creases costs and com­pli­ances for the tax­payer, es­pe­cially the busi­ness own­ers. Do­mes­tic air travel has clearly seen a boost post GST with air prices re­duc­ing. GST is a great re­form but we need to work closely with the gov­ern­ment in­dus­try to leapfrog to higher growth.

In terms of our busi­ness, GST has made a neg­a­tive im­pact. The main is­sue is that a lot of things are still not clear. There is a lot of am­bi­gu­ity on cer­tain as­pects of GST. Un­til that gets cleared, we can­not as­sess the im­pact of this regime en­tirely. It was said that GST is one tax but the same is not the case. In fact, it is not at all true for the tourism in­dus­try. We are pay­ing tax on tax, and this is what the GST Coun­cil should look at and re­solve the prob­lem. I hope the in­dus­try gets its due soon.

At SOTC, we have ob­served that the GST tax struc­ture has ra­tio­nalised and pre­pared for the roll out of GST, we faced lesser con­cerns while im­ple­ment­ing it. This tax struc­ture has brought in sim­plic­ity from a cus­tomer per­spec­tive tour pack­ages. Since travel pack­ages qual­ify for this rate with­out in­put credit, has­sles re­lated to avail credit are min­i­mal. based on com­mis­sion or base fare model on air travel. The GST struc­ture has given an im­pe­tus to the do­mes­tic travel sec­tor, since it al­lows credit of GST paid on the pur­chase of do­mes­tic tour pack needs im­prove­ment.

While there is still a lot of con­fu­sion in the minds of many, we who are part - stood and adapted GST into our busi­ness. It was re­ally a chal­lenge with a lot of un­cer­tainty about GST where apart from the trade even the con­sul­tants had dif­fer­ent views on var­i­ous things. It was but some pre­sen­ta­tions by TAAI cleared some myths and doubts about GST. To­day, based on the knowl­edge that we have re­ceived in the last one year through var­i­ous plat­forms, we feel we are ready for it.

GST is a good ini­tia­tive. Since multi-level buy­ing and sell­ing is in­volved in travel trade, the process be­comes slightly com­pli­cated for a stake­holder. as most stake­hold­ers are small and medium op­er­a­tors. With a com­plex struc­ture in terms of busi­ness trans­ac­tion, cus­tomers shouldn’t end up pay­ing more taxes. How­ever, the in­put tax credit al­lowed for tour op­er­a­tors is a wel­come move. GST should be made user-friendly not only for the stake­hold­ers but also for end users.

Be­fore GST was rolled out, the tourism in­dus­try was li­able to pay mul­ti­ple taxes. With one na­tion, one tax— GST, the cost of the land pack­ages in In­dia have re­duced to quite an ex­tent. As we move for­ward, enough time has been pro­vided by the gov­ern­ment to up­dates and many con­fer­ences in In­dia were ar­ranged to sa­ti­ate the queries and prob­lems. Mov­ing for­ward, the sys­tems are easy to fol­low now. With uni­form rates and bet­ter use of in­put credit, the cost for the end users have re­duced. In­dia is tak­ing baby steps in dig­i­tal im­ple­men­ta­tion of the taxes.

While the road to 'One Na­tion One Tax' has been a chal­leng­ing one, ac­knowl­edged in this year of GST im­ple­men­ta­tion. The gov­ern­ment has put in strong ef­forts to ad­dress var­i­ous is­sues in­clud­ing fre­quent amend­ments, Con­sid­er­able in­ter­ven­tion is yet re as it con­tin­ues to evolve. De­spite the mul­ti­ple con­tin­u­ing chal­lenges of adapt­ing to GST across the ecosys­tem and the cum­ber­some com­pli­ance process due sys­tem chal­lenges from GSTN, our core travel busi­nesses have de­liv­ered strong re­sults, thanks to our fo­cused ini­tia­tives of not just grow­ing vol­umes and pro­duc­tiv­ity but also en­hanc­ing mar­gins.

GST has com­pleted one year but re­gret­tably there is still not much clar­ity for us in the travel and tourism in­dus­try. Our in­dus­try is quite com­plex; we pro­vide multi-faceted ser­vices which are sourced for our clients and each ser­vice has its own unique­ness. Those com­plex­i­ties still ex­ist which lead to dou­ble and tre­ble tax­a­tion, thereby de­feat­ing the fun­da­men­tal pur­pose of GST: One Na­tion One Tax. Hon­estly, each one of us is still grop­ing in the dark. We still be­lieve that we have got it right. I sin­cerely wish that the de­part­ment sits with us with the right ap­proach and at­ti­tude.

One year of GST has surely been a roller­coaster ride for most peo­ple in the busi­ness. Since cor­rect in­voic­ing and ap­pli­ca­tion is the key in GST, it au­to­mat­i­cally dis­ci­plines all busi­nesses up and down the line. For cruise busi­ness as well as other out­bound busi­nesses, the prod­ucts be­ing sold on­line and over­seas are avail­able to pas­sen­gers at the same price, hence it is a bit GST regime. I guess, busi­nesses would have to live with the com­plex­ity of such tax regimes as the tax base needs to in­crease dra­mat­i­cally for gov­ern­ment to re­con­sider fur­ther ra­tio­nal­i­sa­tion of GST rates. Till then we all need to con­trol

Be­fore GST, we were hope­ful that all our wor­ries would go and the mul­ti­ple taxes would fade away. How­ever, GST came with mul­ti­ple slabs for the hos­pi­tal­ity in­dus­try. We have been telling the min­istry that all our source mar­kets are at 8 per cent and we should be kept in that slab only. How­ever, with the mech­a­nism of re­verse charges and in­put credit, we re­alised that 12 per cent may be a ra­tio­nal thing with 2-3 per cent in­put tax credit. To­day, the 28 per cent GST on ho­tels is mak­ing In­dian ho­tels ex­pen­sive. We did get a few con­ces­sions in the restau­rant in­dus­try but we hope that some­thing is done for the ho­tels as well.

Sub­hash Goyal Hony Sec­re­tary FAITH

Guldeep Singh Sahni Im­me­di­ate Past Pres­i­dent, Out­bound Tour Op­er­a­tors As­so­ci­a­tion of In­dia

Sam­pat Da­mani Found­ing Part­ner Disha Trav­els GST is a great step. For the ho­tel in­dus­try, there is now 18 per cent and 28 per cent slab. The 18 per cent slab is very fair. The is­sue is with the 28 per cent slab be­cause some of our ho­tels come un­der it...

Him­mat Anand, Founder Tree of Life Re­sorts & Ho­tels and Tree Leaf Hos­pi­tal­ity

Chan­der Man­shara­mani Vice Chair­man, In­dia Con­ven­tion Pro­mo­tion Bu­reau (ICPB)

Sameer Kar­nani Travel Agents As­so­ci­a­tion of In­dia (Western Re­gion)

San­jay Narula Vice Pres­i­dent, Travel Agents As­so­ci­a­tion of In­dia

Vishal Suri Man­ag­ing Di­rec­tor, SOTC Travel

An­jum Lokhand­wala Founder & Di­rec­tor, Out­bound Kon­nec­tions

De­b­jit Dutta Chair­man, IATO West Ben­gal Chap­ter

Nishith Sax­ena Founder & Di­rec­tor Cruise Pro­fes­sion­als

Deepak Bhat­na­gar Man­ag­ing Di­rec­tor Aa­mantran Travel

Ma­hesh Iyer CEO, Thomas Cook In­dia

Gar­ish Oberoi Pres­i­dent, FHRAI

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