JOIN US A day ahead of a crossover to the age of Goods and Services Tax (GST), Kerala’s tourism and hotel industries are looking at possibilities and challenges in the unified tax system with guarded optimism and concerns over unaddressed issues.
While hotels with daily rental tariffs between Rs 2,500 and Rs 7,500 will pay only 18% as GST (a 28% GST was proposed earlier for hotels with tariffs of Rs 5,000 and above), budget hotels in the Rs 1,000-Rs 2,500 range will pay 12%. While there is a consensus that GST is set to spell good times for the budget and medium-range hotels, the 28% GST on hotel rooms with tariffs of Rs 7,500 and above is another story.
“It’s difficult to pitch that kind of rates to all tourists,” Rajesh Nair, Corporate General Manager, Eastend Munnar, told DH. Nair said in destinations like Kumarakom or Thekkady, most of the hotels in prime locations are in the Rs 7,500-or-above segment. More crucially, there is a lack of clarity among tour operators with regard to the new tax slabs. While uniformity is proposed to ensure easy tax compliance, Nair pointed out that one hotel could still have rooms falling in different tax brackets.
State Finance Minister T M Thomas Isaac, who said GST could significantly boost tax collection in the state, also pointed to concerns raised by owners of hotels and small eateries with annual returns between Rs 20 lakh and Rs 50 lakh – specifically, hiking of the existing 0.5% tax paid by these eateries to a 5% GST.
G Jayapal, general secretary of Kerala Hotel and Restaurant Association, said the new structure could deal a severe blow to budget eateries that constitute between 70% and 80% of the state’s restaurants.