Ache din for the hospitality industry?

GST Council’s decision to levy goods and services tax (GST) on the actual tariff for hotel rooms instead of declared tariffs has relived for both hoteliers and consumers. Most of the hoteliers are saying that this decision will lead to an improvement in occupancy rates of the hotel. Earlier GST was mandated to be levied on the declared tariffs on hotel rooms. However, hotels are known to offer discounts on room tariffs to patrons which alter the Declared rates and which could correspond to a different GST rate as per the prescribed rate slabs on room tariffs which used to create conflicts between hotel industry and consumers. Earlier, If your printed room rates were ranging between Rs 2,500 and Rs 7,500 then there was 18 percent GST on your bill and if your tariffs are of Rs 7,500 and above it attracted 28 percent GST. But after a new decision, if your room rate is below 7500 after discount then you need to pay 18%, not 28%.

Hotel and Restaurant Association of Western India (HRAWI) had appealed for the rate categorization for hotels to be done basis the Transaction value or Actual value rather than on the Declared tariff. President of HRWAI, Mr.Dilip Datwani looked happy with this decision and said “This is a welcome move and the HRAWI thanks the Government for considering our request. The Association’s consistent engagement with the Government and GST Council has finally yielded results. Applying GST rate on Declared Tariff was incorrect and caused confusion for guests,”

Mixtures of reactions are coming by hospitality veterans on this decision of GST council. Many hoteliers are saying that this change would boost occupancies, while many are saying that this decision will not lead to a direct increase in average occupancy.

Rishi Puri, Vice President, Lords Hotels & Resorts had commented that many of our leisure properties, the tariffs either get discounted or even demand a premium based on the season. During the off seasons, we sometimes discount it by as much as 50 percent and in peak seasons with good occupancy, the tariffs are higher. The change will certainly lessen the GST burden on the customer and is a positive development for the hospitality industry.

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