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Impact of GST in hospitality business
01-May-2023 (In GST Law)
How will the GST impact the restaurants and hotel businesses in India? I own a boutique hotel so will I have to pay more tax eventually?
A GST of 18% has been levied on room rent; which is much higher than the previous tax regime in most states, on most hotel star categories.
Pros:
Pros:
- Service: It will help in improving the quality of services as there will be just one tax to calculate.
- Management: As with only one tax to compute the bill, time will be saved.
- Customer understanding: It is still very difficult to differentiate between VAT and an entertainment tax for the customers. However, under the GST customers will see only a single charge on their bill and it would give them a clear picture of the tax they are paying.
- Food: Food is now going to be charged at 5% which may come as an advantage in most states
- Costs of services: Even with GST charged at 18%, there is minimal cost reduction in both cases.
- Disparity with other Asian Countries: As India becomes a big player in the global hospitality and tourism industry; we need services to be at par with global rates. Our Asian neighbors such as Japan and Singapore have very low tax rates for their hospitality sector (8% and 7% respectively) which is why they rank high on tourist wish lists.
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Adv. Siddhant Sharma
Delhi | 200+ Answers
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