Budget 2024: Tourism industry demands major GST change, check details

Budget 20245-25: travel and tourism industry on Wednesday called on government to introduce a uniform 12 per cent Goods and Services Tax (GST) rate on hotels in upcoming Budget for 2024-2025 to enhance domestic and inbound tourism.

Industry leers highlighted that current tiered GST structure, which varies based on hotel room tariffs, les to price disparities. For instance, a room night costing Rs 10,000 is taxed at 18 per cent, while an off-season rate of Rs 7,000 is taxed at 12 per cent. y argue that this system complicates pricing strategies for hotels.

Rajesh Magow, Co-founder and Group CEO of MakeMyTrip, stressed need for a simplified tax regime. "We urge finance minister to consider a uniform GST rate of 12 per cent on hotels in Union Budget FY25. This will help simplify compliance processes," Magow said. He also pointed out need to eliminate disparities between e-commerce operators and suppliers. "Currently, a customer pays a 5 per cent GST charge when booking a non-AC bus through an e-commerce platform, whereas this charge is zero for a direct booking from a bus operator, regardless of booking mode," he explained.

Magow furr vocated for tax incentives for hotels and homestays opting sustainable practices. He noted that such measures align with India’s commitment to United Nations Sustainable Development Goals (SDGs), specifically SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). "By offering tax incentives that promote eco-friendly measures in tourism sector, such as energy-efficient lighting, water-saving devices, and waste-reduction practices, finance minister will be encouraging industry to contribute to se global goals," Magow ded.

Preep Shetty, President of Hotel and Restaurant Association (Western India), echoed se sentiments. He urged government to prioritise tourism and hospitality sector, which contributes around 10 per cent to India’s GDP. "Granting infrastructure status to hotels and convention centers with project costs of Rs 10 crore and above is essential for attracting investments and accelerating growth in hospitality sector," Shetty stated.

Shetty also highlighted high GST rates for hospitality, which are among highest globally, making tourism expensive. "We urge abolition of 18 per cent GST category for hotels with room rates above Rs 7,500 per night, merging it with 12 per cent GST category to boost both domestic and inbound tourism," he said. ditionally, Shetty called for a national e-single window clearance system for hotels and restaurants through Hospitality Development Promotion Board to reduce costs and improve competitiveness.

Mhavan Menon, Executive Chairman of Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays, and TCI), proposed exemption of Section 53 of GST for travel agents. "This will not cause any revenue loss for government, as airlines are alrey discharging tax on ir sales. We also recommend lowering Tax Collected at Source (TCS) to 1 per cent. If not, a standardisation at 5 per cent on foreign travel packages (against current 5 per cent and 20 per cent slabs) would be beneficial," Menon suggested.

industry’s unified call for a simplified GST structure and supportive measures aims to boost India’s tourism sector, making it more competitive and sustainable.