With GST, the hospitality industry will have an administrative ease as it abolishes several other taxes, leading to reduction in procedural steps and better chances to streamline the taxation process. The long-term gain would be that the tourism and hospitality industry will find it easier to claim and avail input tax credit (ITC) and will get full ITC on their inputs. Before GST, the tax paid on inputs (raw edibles for food, cleaning supplies etc.) could not be adjusted against the output without complications. However, this will become easier in the GST regime.
GST is also beneficial in the mid-scale hotel landscape as the guest is taxed based on the rate charged with average taxation at 18% (for rooms charged at less than INR 5000). The client also benefits with lower tax slabs which is a function of rate charges.
Having said that, our hotels faced some problems when GST was introduced. There was an ambiguity on taxable amount – it was unclear whether different slabs would be on charged tariff or published tariff. Besides this, the software companies were not geared up to the changes as per new guidelines as the guidelines were changing every day.
