Viewpoint of Ms. Sonica Malhotra, Joint Managing Director, MBD Group on the recent GST Council’s decision to relax the criteria for charging 28% GST on Rooms for Hotels from Rs. 5,000 to Rs. 7,500 –
“We welcome GST Council’s decision to relax the criteria for charging 28% GST on Rooms for Hotels from Rs. 5,000 to Rs. 7,500 and bringing Five Star Hotel Restaurants in line with all other Air Conditioned Restaurants for GST. Both these decisions will help in saving the industry from unwarranted trouble and are definitely good for end consumers/tourism and Hospitality Industry.
Higher rate of 28% would have affected the rooms ranging upto Rs.7,500, making costing for tourism overpriced and certainly impacted not only Group Tourism, MICE but also individual tourism and travel. This decision of GST Council to impose 18% GST on rooms with tariffs between Rs. 2,500 and Rs. 7,500 will address major chunk of Hotel industry business, which would have been adversely affected had this correction not made. Similarly, the decision of reducing GST on Five Star Hotel’s Restaurants and bringing them at par with standalone air-conditioned restaurants is a positive move. Also, this is good from the business perspective as the restaurants business heavily rely on nonresident guests and 28% would have been very taxing for the end consumers and hence impacted hotel industry business as a whole.”