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Tourism federation calls on government to address industry concerns over GST

By on February 24, 2022 0

NEW DELHI : The Federation of Indian Tourism and Hospitality Associations (FAITH) has asked Union Tourism Minister G Kishan Reddy to address industry concerns over Goods and Services Tax ( GST) with the Group of Ministers (GOM) to assess the structural tax rate.

FAITH, who represents many tourism associations across the country, said India’s tourism, travel and hospitality industry was just beginning to emerge from its worst phase and the time had come to incentivize the both tourist demand and tourist supply thanks to the rationalization of the GST rate. structure.

The industry body said hotels should be allowed to charge the Integrated Goods and Services Tax (IGST) which will enable seamless availability of credit to all travel agents and tour operators, and thus create a sustainable business. holidays, meetings and congresses in the country. .

He said restaurants should also have the ability to charge 12% GST with full input tax credits, and that the rate should be decoupled from any room rates if they are part of hotels.

The body also added that tour operators should be charged a special flat rate GST of 1.8% with full GST offsets. The GST offset is paid on available inputs as a credit against the GST payable on outputs. Input tax credits can be deducted from GST liabilities on goods. The current 5% uncompensated rate structurally implies that tour operators have an intrinsic margin of around 27.8%, which is an inherently flawed assumption in the internet economy.

The body also demanded that travel agents be given the opportunity to explore the reseller model for billing, as they are the distribution arms of airlines. This will allow travel agents to structure optimal partnerships according to business needs between their customers and partner airlines.

Further, he urged the Minister to consider the rebate of GST on purchases by foreign tourists to be implemented as already enacted under the GST. The Tourist Tax Reimbursement (TRT) scheme of the IGST Act and its applicability must be ensured for all tourism products and services enjoyed by them in India. This will prevent India from exporting its tourism taxes and increase our global competitiveness in global tourism, the association said.

He said industry players must be allowed to get a refund of any unused GST credit from state governments, which will provide them with much-needed cash.

According to the India Brand Equity Foundation, the tourism and travel industry contributed 6.8% to India’s gross domestic product in 2019.

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