The Goods and Service Tax (GST) regime implemented on July 1, 2017 has mixed reactions from the industry. However, the industry has now geared up to adopt the regime as there is no choice but to accept it.
“The hotel and restaurant industry has been witness to a slowdown in the last three weeks. The maximum downward impact was seen in the last week of June with almost 35 per cent drop in sale. During the implementation phase, we are expecting issues to crop up, especially in the first three months, but are not unduly worried about it as the Government is expected to help us resolve them. Hotel and Restaurant Association of Western India (HRAWI) will be offering support, suggestions and assistance to members as and when required. We also expect a few technical challenges along the way. But overall the industry is geared to adapt to GST regime,” says Dilip Datwani, President, HRAWI
According to Ritesh Agarwal, Founder &CEO, Oyo the industry has been anticipating and awaiting GST. “Being a large-scale reform, there may be some initial teething issues. But the Government has already announced that companies would be allowed to file late returns during the first two months. This is a practical solution permitting flexibility in the early period as all stakeholders come to grips with the nationwide tax system. Of course, there may be challenges in compliance and implementation. But over time, there will be more clarity and familiarity, enabling all stakeholders to adjust, adapt and adhere.” He welcomed the GST slab for mid-market hotels which was revised in response to an industry-wide request for relief. “This is a progressive step and will ensure that more businesses come under the tax-net and deliver more revenue to the exchequer. Meanwhile, the lower tax rate for budget hotels sector will ensure that the industry’s quality upgrade continues while delivering standardized accommodation to millions of middle-class travellers. This will also save and create thousands of new jobs which could have been impacted under higher tax-rates. Hotels are the single biggest contributor to tourism industry which accounts for 7.5 per cent of the GDP. The move will boost revenue from Travel & Tourism sector for the next many years. The industry is expected to contribute 280 billion dollars to the GDP by 2026 and will pass on benefits of uniform taxation across the country to travellers.”
Rishi Puri, Vice President, Lords Hotels & Resorts, opined that there will be interim chaos as expected during the transition but we are optimistic that things will revert to usual in a couple of months. “Many of our hotel units have already implemented the required back-end changes and some are still in process. The scenario feels similar to the demonetization days when suddenly cash wasn’t available but then a couple months later everything fell in place. We will hope that this situation too will stabilize sooner than later and that GST works out for us and the nation,” he said.
Amitabh Khosla, Country Director – India, International Air Transport Association (IATA), said that IATA has been in regular contact with the Indian authorities on several issues regarding the application of the GST to the airline industry based on the underlying legislation and have been supporting affected airlines with GST compliance-related activities in the lead-up to implementation on 1 July 2017.
“Nonetheless there are still information gaps. We look forward to receiving the guidance notes to be provided by the GST Council, which will clarify various airline specific issues, such as the taxation treatment of continuous journeys, and other pressing matters. On the air-cargo side, we believe that the levying of GST on cargo export services by air contradicts standard GST principles as well as the treatment of such services under the Service Tax regime. Clarification would help align this with international standards and principles,” Khosla added.
