GST simplified for Hotels, should yield positive results for industry

With the various measures taken by Government to simplify GST, in a meeting of GST council, it was decided to change the basis of the rate of tax for Hotel Industry. The basis of rate was changed from ‘declared tariff’ system to ‘actual tariff’ system. Declared Tariff means the tariff declared by Hotel at any place like Board at the hotel, promotion material, at any digital platform and so on. In general practice, there is usually a difference between declared tariff and actual tariff.

The concept of declared tariff on the one side could have fetched more revenue to government but was very subjective and difficult to enforce. The notified change is a welcome move for industry which simplifies the procedure and arrests the unwanted valuation litigation. It will make things pocket-friendly and simple to understand for the end user as well.

The Indian Government has a focus of doubling the tourism foreign exchange earnings and has a target of 20 million foreign tourist arrivals (FTAs) by the year 2020. The measure should also help increase the country’s ranking in terms of ‘ease of doing business’ across countries.

The notification to this effect was issued on 26th July 2018 vide Notification No. 13/2018-Central Tax (Rate)