Tourism Minister To Not Approach GST Council For Reducing Tax On Hotels To 12%

The tourism ministry has no plans to approach the GST Council for reducing the goods and services tax on all hotel rooms to 12 per cent, Union Tourism Minister Prahlad Patel said on Tuesday. The ministry is aware of the tax levied on various tourism products and services, including hotels, as the same directly impacts the country's tourism competitiveness vis-a-vis other countries, he said in a written reply in Rajya Sabha. "At present, the Ministry of Tourism has no plan to approach the GST Council for reducing
GST (goods and services tax) on all hotel rooms to 12 per cent, since the GST Council decides the rate of taxation after taking into consideration the factors affecting various segments of business as well as to ensure optimum revenue generation required for overall development of the economy," Patel said.

He also informed the House that the tourism ministry has taken up the issue of GST with the Ministry of Finance from time to time and some changes have been made to the GST slabs for the sector. The threshold limit for applicability of 28 per cent GST rate was increased from Rs 5,000 to Rs 7,500 per room per day by the finance ministry. The basis for determination of the applicable rate has been changed from declared tariff to actual tariff, Patel said.

He said that GST on restaurants and eateries have been brought down to five per cent irrespective of whether they are air-conditioned or not.

If a restaurant is located within the premise of a hotel, club or any commercial place meant for residential or lodging purposes with a daily tariff of Rs 7,500 per day per unit or above, the tax will be 18 per cent, Patel said.