The revised GST is incorporated on hotel room tariffs by the hospitality sector. This has expanded the tax slab of 18 percent to tariff of the range of Rs 2500 and Rs 7500 which was earlier Rs 5,000. In spite of looking for a more competitive and simpler GST, the hotel industry has seen a partial relief with the GST announced.
Together with the changes in room tariff slabs, the rate of air conditioned rooms and those in 5-star hotels that have GST of the range 18 percent will be effective from 1st of July.
Its a welcome move. For India to remain as a competitive destination for tourists, this is however not an important move. The neighboring countries pay GST or equivalent tax of 5 to 12 percent. And hotels present in India will levy about 18 to 28 percent of GST. This is not going to attract tourists who can enjoy significant deals at neighborhood countries. It is a competitive world and we need to remember it. There are a lot of choices for tourists these days.
On hotel rooms that have tariff of Rs 7500 or more, a tax of 28 percent will be imposed while the same was imposed for rooms with Rs 5000. There will be 18 percent tax for hotel rooms with Rs 2500 to Rs 7500 charge.