GUWAHATI: Major changes were announced at the 37th Meeting of the Goods and Services Tax (GST) Council on September 20 that will substantially impact the tourism sector.
Based on these changes, the GST rate rationalisation will make the hotel industry competitive in the domestic and international market and also help this sector to contribute to the economy significantly.
GST has been reduced on hotel accommodations services in the following manner:
For Rs. 1000 and less transaction value per unit per day, no GST changes have been made. Whereas for Rs. 1001 to Rs. 7500 transaction value per unit per day, GST has been reduced to 12% and for Rs. 7501 and more transaction value per unit per day, GST has been reduced to 18%.
GST on outdoor catering services other than in premises that have daily tariff of unit of accommodation of Rs 7501, GST has been reduced to 5% without ITC from the previous 18% with ITC. Catering in premises where daily tariff of unit of accommodation is Rs 7501 and above, shall remain at 18% with ITC.
GST on caffeinated drinks has been raised to 28 % from the previous rate of 18 %, with an additional 12 % GST compensation cess.
These changes have an indirect impact. It exports promotion such that to exempt services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
It should be noted that these changes will most likely be in effect from October 1, 2019.
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