GST: A Mixed Bag For Tourism Sector

The Indian tourism industry was for a long time perceived to be expensive as compared to many other economies.

- Ankita Chakraborty and Anustup Roy Barman

A good hotel in Thailand with premium facilities will cost around TBH 1500 which translates roughly to around ₹3000 in the Indian currency. But premium hotels in India cost way more than that.

Under the previous tax system, the traveller had to pay different taxes like service tax for the rooms, restaurant, banquets, cab service, internet and others, VAT for food and beverages, alcohol, in room sale of food (such as in room dining, mini bar etc), customs and excise duty, central excise duty on the manufacture of bakery products, state excise on alcohol, etc. Additionally, there were other taxes like the luxury tax on room rentals, entertainment tax on casinos, discos, videos, state entry taxes and many other taxes. However, the new the Goods and Services Tax (GST) has made the process much simpler.

Positive impacts

Under the GST, all the indirect taxes are merged together under one single tax system that runs uniformly across the country. This will help the Indian tourism industry and bring about a much needed parity across tourists destinations in India. According to Mahesh Iyer, COO, Thomas Cook (India), “We are delighted that the GST has been passed which is a truly crucial development towards a unified tax regime, vital in addressing the ambiguities of the current indirect tax landscape, and hence beneficial to the economy as a whole. India is a key emerging market for our sector and this move will strengthen the confidence among international investors.”