SHOMA PATNAIK | NT
PANAJI: Surprised by the local hotel industry’s cribbing over the increase in tax rate under the new goods and service tax regime, GST commissioner in the state Deepak Bandekar on Thursday said the industry’s claims appears to be groundless.
Bandekar pointed out that the industry has no reason to complain since the tax rate of 28 per cent is only applicable to five-stars with room tariff above Rs 7,500 per night.
“Only five-star hotels have been adversely affected by the GST regime since they are paying higher tax of 28 per cent as compared to the previous 21 per cent. But even this burden is not what it seems because five-stars hotels are getting input tax credit on all that they utilise, which was not the case earlier,” he enunciated.
The GST regime allows the five-star hotels to earn input tax credit on all products that they consume, such as linen, furniture, AC, TV, etc., bringing down the effective tax rate to much less than 28 per cent, according to the commissioner.
He explained that non-five stars have gained after the GST regime kicked in, as now there are slab rates as against the previous flat rate.
Hotels with room tariff between Rs 5000-Rs 7,500 per night are now taxed at 18 per cent compared to 21 per cent formerly (luxury tax of 15 per cent plus service tax of six per cent.) Similarly, the tax for hotels with room tariff between Rs 5,000-Rs 1,000 per night is 12 per cent while budget hotels with tariff less than Rs 1,000 per night are charged GST of three per cent.
“The industry’s allegation of being heavily taxed is a misperception. They are looking at the invoice, but the GST is on transaction value and not on the official tariff card,” the commissioner said, adding that he could not understand the reason for complaints.
“Anyone can make allegations but the facts should match with the allegations,” he said. However, Bandekar clarified that if the state government succeeds in bringing down the slab rate of 28 per cent to 18 per cent, local luxury hotels would benefit.
Goa’s tourism and hospitality industry has been crying over the high GST rate of 28 per cent. The TTAG has said that high tariff is one of the causes of decline in the arrival of foreign tourists in the ongoing season.
The tourism body has also complained of the GST regime being a nightmare to hotels due to its system of multiple slabs and reporting structure.
Bandekar added that the demand for lowering the tax rate of 28 per cent (for five-stars) is also from the all-India industry, but the matter is yet to be taken up by the GST Council.
Source:: The Navhind Times