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“It is estimated that the lower GST rate of 5% will contribute to a decrease in our Current Account Deficit, increase in the GDP, doubling up of both foreign and domestic travel and also doubling up of tourism-induced employment, across each state and nationally,” says Dilip Datwani, President, HRAWI. “India’s tourism competitors in South East Asia (excluding Japan and China) earn among themselves over $150 billion in foreign exchange and attract almost 100 million tourists annually. It is estimated that a GST rating of under 10% will enable India to increase its price competitiveness and target an additional 10% of this market in the short to mid-term, and up to 20% of this market in the medium to long term,” he adds.
The study also estimates that a GST rate of 5% would more than double both foreign travels coming to India to 20 million tourists and domestic travel within India to 2.5 billion.
One of the biggest revenue generators of Foreign Exchange to India is tourism and every foreign tourist spending an additional day in the state of Maharashtra alone translates to incremental revenue of Rs 600 crore which benefits not just the industry but also means additional revenue to the government coffers.
“We welcome the 5% tax slab on food, which is a positive outcome of subsumed taxes for hotels and restaurants. However the 18% levy on services or room revenue in our case, compared to our neighbouring countries which charge a Tourism tax between four to seven percent, rules out fair competition. Abroad, GST can have least slabs as they have minimum exclusions unlike ours. However, in India, breaking down the GST into tiers for simplifying the rates at which different goods will be taxed is not turning out to be favourable to tourism,” said Kamlesh Barot, past President, Federation of Hotel and Restaurant Associations of India & HRAWI.
“It is also estimated that a lower GST for tourism will easily double the jobs in this sector of the employable to nine percent from the present 4.5%. This will prevent unplanned urban migration and create livelihood across the hinterland. Tourism has the potential to increase contribution to employment to over 10%. We are still hopeful that the Finance Minister will reconsider and provide a tax rate like the Tourism tax rate applicable in most countries,” concludes Barot.
Source: travelnewsdigest.in