Industry Insiders Call for Consistent 12% GST Rate on Hotel Stays

In It Together: The Hospitality Sector’s Support for Uniform GST

On Wednesday, the travel and tourism industry urged the government to consider a uniform 12 percent GST rate on hotels in the upcoming Budget for 2024-2025 to boost domestic and inbound tourism. The tiered GST based on hotel room tariffs can lead to price disparities as hotels adjust room rates based on demand and peak season rates. For example, a room night costing Rs 10,000 falls under the 18 percent GST rate, while an off-season rate of Rs 7,000 falls under the 12 percent GST rate.

“We urge the finance minister to consider a uniform GST rate of 12 percent on hotels in Union Budget FY25. This will help simplify the compliance processes,” online travel services provider MakeMyTrip co-founder and Group CEO Rajesh Magow said.

He said the government should remove disparities between e-commerce operators and e-commerce suppliers in the domestic market. “For example, currently, a customer pays a 5 percent GST (goods and services tax) charge when booking a non-AC bus through an e-commerce platform. This charge is zero for a direct booking from a bus operator, irrespective of whether it is done online or offline,” he added.

Magow further stated that tax incentives for hotels and homestays for adopting sustainable practices align with India’s commitment to the United Nations Sustainable Development Goals, particularly SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). “By offering tax incentives that promote eco-friendly measures in the tourism sector, such as energy-efficient lighting, water-saving devices, and waste-reduction practices, the finance minister will encourage the industry to contribute to these global goals,” he added.

Hotel and Restaurant Association (Western India) President Pradeep Shetty said the association believes that tourism and hospitality, accounting for around 10 percent of India’s GDP, should be declared a priority sector. “Granting infrastructure status to hotels and convention centres with project costs of Rs 10 crore and above is essential for attracting investments and accelerating growth in the hospitality sector,” he added.