By Admin 
A big decision related to the hotel industry has been taken in the 56th GST Council meeting. Now hotel rooms with up to Rs 7,500 per day will be replaced by only 5% GST instead of 12% GST. That too without input tax credit (ITC).
This step will provide relief not only to the hotel owners but also to the passengers directly. Especially for people who come from middle class groups. The tourism sector contributes more than 5% to India’s GDP. With the reduction of GST, speed can be seen in this area.
Benefits for middle class and budget passengers
Nikhil Sharma, MD and CO (South Asia) of Radisson Hotel Group, said that this decision would make quality hospitality more economical for middle class passengers. He said that by reducing the burden of initial tax, the government has done a good job for the medium market and budget hotels. That is, now a middle class family or budget passenger will have to pay less tax than before in the hotel. This will directly affect the demand for domestic tourism and the number of passengers will increase.
Effect on hospitality industry
President of Federation of Hotel and Restaurant Association of India (FHRAI) K.K. Shyama Raju says that this improvement will make hotels more economical and attractive not only for domestic but also for international travelers. He informed that the hotel industry already contributes a big contribution to GDP and employment generation. This reduction in tax rate will increase the demand for tourism, promote the second expenses in hotel service and create more employment for youth and women.
The old demand for hotel industry and the path ahead
FHRAI and Hotel Association of India (HIA) had been demanding for a long time that 5% GST should be implemented with input tax credit (ITC) on all hospitality and tourism services. However, the GST Council has just implemented 5% without ITC. Despite this, Hotel Industries believes that this is a positive step, which will work to increase the competition of the hospitality sector. If 5% GST is applied with ITC in the coming time, then the global status of India’s hotel industry can be stronger.
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