Realty & hospitality firms see room for demand boost

Real estate and hospitality companies are upbeat on Prime Minister Narendra Modi's 'Diwali gift' of goods and services (GST) reforms and lower taxes on essential goods.

- AKSHARA SRIVASTAVA, SANKET KOUL & ANEEKA CHATTERJEE

Hospitality players are hopeful the lower tax rates will add to the tailwinds the sector is already witnessing, besides improving tourism.

Real estate industry executives believe that a two-slab rate structure to simplify compliance and in turn lower costs for consumers would help push sluggish demand in the housing sector.

"Lower taxes on rooms and dining could make the industry more competitive and help retain domestic tourists who opt for lower cost neighbouring countries," said Arjun Baljee, president of Royal Orchid Hotels, alluding to South East Asian markets that are increasingly attracting tourists from international markets, including India.

Hotel rooms below ₹1,000 are currently GST-exempt, but most branded hotels face 12 per cent tax for tariffs between ₹1,000 and ₹7,000 or 18 per cent on tariffs upwards of ₹7,500.

Restaurants face a 5 per cent tax rate without input tax credit.

Shifting inputs like food and supplies (now 12 per cent) to a lower merit rate could cut costs.