Federation of Associations in Indian Tourism & Hospitality (FAITH) has thanked the Fitment Committee for considering favourably the drawback of taxes on foreign tourists on their goods purchases in India.
However, the association has recommended five rationalisation measures across the tourism, travel and hospitality value chain for consideration for the next GST Council meeting.
Hotels to be allowed to charge IGST which will enable seamless availability of credit across India to all travel agents and tour operators and will thereby lead to building up a sustainable domestic holiday and meetings and conventions business within the country.
Tour operators to be enabled a special presumptive GST rate of 1.8% with full GST setoffs. The current rate of 5% without setoffs structurally implies that tour operators have an inbuilt margin of around 27.8% which is an inherently flawed assumption of the prevailing business models. This by default creates an inherent linkage to value addition only and prevents a tax on tax.
Travel Agents be also allowed the option of exploring the reseller model for charging as they are distribution arms for airlines. This option will enable travel agents to structure optimal partnerships as per their business requirements between their clients and their airline partners.
Tourist transporters be allowed the provision for availing GST setoffs on interstate Tourist transport taxes, taxes on parking fees and on taxes on fuel which is their biggest input costs.
Restaurants should be also allowed the additional option of charging GST at 12% with full Input tax credits and the rate should be delinked from any room tariffs if they are part of hotels.
FAITH mentioned, that Indian tourism has an immense inherent potential to create upto 10 crores additional jobs pan India over the long-term period, triple its GDP contribution and create forex earnings upto $ 75- $100 bn and GST is a key enabler for creating this global and domestic competitiveness in tourism directly and through its indirect impact.
