Indian tourism industry is under threat from GST. With the increased taxes on hotel rooms, tourists might get diverted to other nations like Malaysia, Thailand and Singapore where hotel room taxes are comparatively low.

GST is being applied from coming 1^st July. Entire nation is under a dilemma but one sector which is going to be affected extensively is the tourism sector. Indian tourism is under a gross threat from GST. The amendments made in applicable GST on hotel rooms have come up with two slabs, both of which will affect taxes on rooms to a higher side. Taxes will be on the rise in both budget and luxury rooms which will affect the budget of tourists to a great extent. It is obvious that the hoteliers are under pressure since GST will affect their income graph which may keep going low until GST is revised in the benefit of hotel industry.

Various other countries in the world have a lower tax slab on hotel rooms; hence the increase in India might divert the tourists to other nations and result in a loss in both foreign and domestic income. Out of the tourists visiting India, almost 20 percent come to Rajasthan where Rajasthan contributes to Indian tourism economy to the extent of 15 percent. This clearly indicates that GST will not only affect tourism industry but it will also affect the pace of development of the state which is very likely to see a downfall.

In 2015, India’s contribution to global GDP through tourism industry was 9.8% which came to 9.6% in 2016. Jaipur hoteliers have given the assessment that room rates will go as high as 10% due to GST which will have a negative effect on tourists coming to India. They are very likely to get diverted to other destinations and Indian tourism industry will start witnessing a downfall in its economic stability.

Khalid Khan, President of Rajasthan Association of Tour Operators said that the highest GST is being applied on India which is not so in other countries. Hotel and tourism industry will suffer a lot due to the higher rates. Earlier 18 percent tax was levied on a room with a tariff of 5000 rupees. This was then opposed after which the slab was raised to 7500 rupees.

It is quite likely that rooms with a tariff of 7500 will stay unoccupied. There will be a rise of 10 percent in room tariffs. Tourists will now prefer to stay in rooms which are priced less instead of paying more taxes. The hotel industry might face the pressure of lowering the budget of luxury rooms to cover losses. Rajasthan has 1400 rooms with a tariff of 7500 rupees out of which 275 are in Jaipur. 45 hotels are beyond 7500/- with Jaipur having 10 of these.

Nations with less tax

Source : bhaskar.com