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GST: Hospitality, travel firms see sheer complexity in new taxation compliance

LiveMint logoLiveMint 02-07-2017 PTI

New Delhi: Hospitality and travel industry players expect teething issues to crop up at least in the first few months of GST implementation but are not unduly worried, expecting support from government.

Travel services firms said the "sheer complexity" in GST compliance and the filings required at multiple levels will involve a substantial increase in effort and time. The hospitality players also want the government to put only hotel rooms with tariffs of Rs10,000 per night and above in the top tax bracket of 28% in the GST regime.

"During the implementation phase, we are expecting issues to crop up, especially in the first three months, but we are not unduly worried about it as the government is expected to help us resolve them," Hotel and Restaurant Association of Western India (HRAWI) president Dilip Datwani told PTI.

Expressing similar views, OYO Rooms founder and CEO Ritesh Agarwal said, "There may be challenges in compliance and implementation but over time, there will be more clarity and familiarity, enabling all stakeholders to adjust, adapt and adhere." Being a large-scale reform, there may be some initial teething issues, he added.

Commenting on the immediate issues faced by players in the travel industry, Thomas Cook India CFO and president (commercial, finance and accounts) Debasis Nandy said, "It is the sheer complexity in the execution/compliance that we see significant challenges." He said filing required at multiple levels would mean a substantial increase in effort and time.

On the issue of lower tax rate for budget hotels, Agarwal said such a move would ensure that the industry's quality upgrade continues while delivering standardised accommodation to middle-class travellers. This will also save create new jobs which could have been impacted under higher tax-rates, he added.

However, Federation of Hotel and Restaurant Associations of India (FHRAI) vice president Garish Oberoi said 28% GST for hotel rooms with tariff of Rs7,500 per night and above is very steep.

He asked the government to keep 28% tax only on rooms with tariff of Rs10,000 per night and above.

Travel services firm Thomas Cook India felt GST would result in only marginal increase in cost for the travel sector. "The GST for tour packages, both domestic and international, has seen a marginal increase from 4.5% to 5%, and as such we do not anticipate any impact to holiday demand," Nandy said.

The increase in cost for international and domestic air tickets is also marginal, he added.

"As of now, there has been some reduction in taxes, the benefit of which would be passed on to the customer. However, the full impact of GST on all input cost is yet to be fully ascertained. "After waiting and learning from what happens to the input cost, we will be altering our prices in approximately a month's time," National Restaurant Association of India (NRAI) president Riyaaz Amlani said in an e-mailed response.

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