TLFMagazine -GST and the Indian Traveller

GST and the Indian Traveller

GST and the Indian Traveller

GST and the Indian Traveller

by Abhimanyu Banerji


At the moment Indian travel, tourism and hospitality industries have multiple taxes, levied by both the centre and the states. It is believed now that after implementation of GST, supplies of hotels and restaurants will be subjected to a single tax. As it happens with every new start there is a confusion regarding the bill and its impact on several Indian industries. Here is how it will effect travelling and eating out…


Conveyance costs to see ups and downs!

Economy class air travel will become cheaper

With tax rate fixed at 5 per cent against the existing 6, under the upcoming Goods and Services Tax (GST) regime from July 1. Industry experts say that the announcement is in line with the government's aim to make flying affordable for the masses.

Business class, tickets will become dearer

The tax will go up from 9 per cent to 12 per cent. This might result in the fall of base prices but a significant rise in the overall price is expected.

Trains to become cheaper for ordinary class

Under the new GST regime, travel in ordinary classes by rail will attract less tax, but the AC class travel will be dearer. Given the high demand and low supply in quality passenger rail services , this is not going to have any significant bearing on the travel sector overall.


Hotels and eateries depict a jagged graph too

The economic options

Tax rate for AC restaurants and those with liquor licence will be 18 per cent.  Hotels and lodges charging per day tariff of Rs 1,000 will be exempt from GST. Rate for hotels with tariff of Rs 1,000 to 2,000 per day would be 12 per cent while those with tariff of Rs 2,500 to Rs 5,000 would be 18 per cent.

Luxury experiences to bear the brunt

GST for hotels with tariff above Rs 5,000 will be 28 per cent.  Under the GST rates announced today, 5-star hotels will be charged 28 per cent while AC restaurants and those with liquor licence will be taxed at 18 per cent.

Budget eateries to be more economical

While we applaud the government's effort to keep GST at 5 per cent for restaurants below 50 lacs and 12 per cent for restaurants without AC, we are disappointed with the high GST slab of 18 per cent for organised restaurants and 28 per cent for 5 star restaurants. This will not go a long way to promote tourism and tourism related jobs.

Budget hotels encouraged

A lower tax rate for budget hotels sector will ensure that the industry's quality upgrade continues while delivering standardised accommodation to millions of middle- class travellers.


Benefits for international brands and tourists

Tax Refund for International Tourist (TRT)

This scheme provides an opportunity to the foreign tourists to purchase goods during their stay in any country on payment of GST and obtain refund of the GST so paid, at the time of exit from the country.

Input tax credit (ITC)

One of the greatest advantages of GST is the seamless flow of "input tax credit  (ITC)". Currently, like any other industry participant, hospitality industries also cannot avail input credits on many items of tax value chain. However, since GST encompasses many state and central tax laws, hotels and restaurants can claim ITC in future.