India to attract highest tax on hotel rooms post GST

The Asian Age.

Business, Economy

Top tourism and hospitality chains, including some foreign names remain positive and upbeat about the biggest tax reform in the country.

Representational Image.

Mumbai: With hotel room tariffs of Rs 7,500 and above attracting GST of 28 per cent, hotel rooms in India will become the most taxed in the world, surpassing the likes of New York, London and Paris.

However, top tourism and hospitality chains, including some foreign names remain positive and upbeat about the biggest tax reform in the country. In an article in the Economic Times, Kaushik Vardharajan, vice president, development, India at the Hilton said “Hilton continues to see great potential in India. Tourism, which accounts for 7.5% of the GDP, is the third largest foreign exchange earner for the country. We are committed to India as a key market and the last few years were dedicated to establishing the operations infrastructure, opening several hotels and building a strong development pipeline”.

Last week, the GST Council revised the rates on hotel rooms. Rooms priced above Rs 7,500 will attract 28 per cent GST while those priced between Rs 2,500 to Rs 7,500 will attract 18 per cent GST. This will make Indian hotel rooms top the list for the highest taxation in the world, without add-ons like municipal tax, service charge, etc.

Hilton has five brands – Conrad, Hilton, DoubleTree by Hilton, Hilton Garden Inn and Hampton by Hilton — across 11 cities. It foresees a growing foreign tourist population and expects domestic tourism to surge demands for premium branded hotel rooms.

Vardharajan said Hilton is operating over 6,500 keys in India. He said the chain is busy educating concerned teams on billing queries that guests may have on GST levied.

Kurt Straub, VP, operations, at Hyatt Hotels & Resorts said “This is an important component of our ‘GST-Ready’ exercise. Our IT systems across the 26 Hyatt properties in India have also been gearing up for the impending changes in indirect taxation in India”.

The hospitatality industry associations had been urging the government for relaxation in the GST rates. The pushing of Rs 7,500 rooms into the 28 per cent slab is a partial relief for them. “With the 28% GST slab threshold now being raised to Rs 7,500 the GST rate is competitive compared to what it was for our properties in some tier 2, tier 3 cities,” said Raj Rana, South Asia CEO at Carlson Rezidor that owns Radisson and Radisson Blu hotel brands. 

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