GST impact: Hospitality, travel cos expect issues in initial months

Business Standard By Press Trust of India July 2, 2017. 14:03 IST

Industries expect support from the government

Hospitality and travel industry players expect teething issues to crop up at least in the first few months of GST implementation but are not unduly worried, expecting support from government.

Travel services firms said the "sheer complexity" in GST compliance and the filings required at multiple levels will involve a substantial increase in effort and time.

The hospitality players also want the government to put only hotel rooms with tariffs of Rs 10,000 per night and above in the top tax bracket of 28 per cent in the GST regime.

"During the implementation phase, we are expecting issues to crop up, especially in the first three months, but we are not unduly worried about it as the government is expected to help us resolve them," Hotel and Restaurant Association of Western India (HRAWI) President Dilip Datwani told PTI.

Expressing similar views, OYO Rooms Founder and CEO Ritesh Agarwal said, "There may be challenges in compliance and implementation but over time, there will be more clarity and familiarity, enabling all stakeholders to adjust, adapt and adhere."

Being a large-scale reform, there may be some initial teething issues, he added.

Commenting on the immediate issues faced by players in the travel industry, Thomas Cook India CFO and President - Commercial, Finance and Accounts, Debasis Nandy said, "It is the sheer complexity in the execution/compliance that we see significant challenges."

He said filing required at multiple levels would mean a substantial increase in effort and time.

On the issue of lower tax rate for budget hotels, Agarwal said such a move would ensure that the industry's quality upgrade continues while delivering standardised accommodation to middle-class travellers.

This will also save create new jobs which could have been impacted under higher tax-rates, he added.

However, Federation of Hotel and Restaurant Associations of India (FHRAI) Vice President Garish Oberoi said 28 per cent GST for hotel rooms with tariff of Rs 7,500 per night and above is very steep.

He asked the government to keep 28 per cent tax only on rooms with tariff of Rs 10,000 per night and above.

Travel services firm Thomas Cook India felt GST would result in only marginal increase in cost for the travel sector.

"The GST for tour packages, both domestic and international, has seen a marginal increase from 4.5 per cent to 5 per cent, and as such we do not anticipate any impact to holiday demand," Nandy said.

The increase in cost for international and domestic air tickets is also marginal, he added.

"As of now, there has been some reduction in taxes, the benefit of which would be passed on to the customer. However, the full impact of GST on all input cost is yet to be fully ascertained.

"After waiting and learning from what happens to the input cost, we will be altering our prices in approximately a month's time," National Restaurant Association of India (NRAI) President Riyaaz Amlani said in an e-mailed response.

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