The hospitality sector in Mysuru has appealed to the government to reduce the Goods and Services Tax (GST) rates announced for hotels and restaurants on the grounds that it will cripple the tourism sector.
The economy of Mysuru to a large extent hinges on its tourism industry. The proposed GST rate is higher than what was bargained for, said Mr. Narayana Gowda, president, Mysore Hotel Owners’ Association.
The GST on restaurants varies from 5% to 18% depending on the turnover. However, hardly any hotels or restaurants come under the 5% slab rate which is restricted to units with an annual turnover of ₹50 lakh, according to Mr. Narayana Gowda. “Most restaurants have an annual turnover that is higher than ₹50 lakh p.a. and hence fall under 12% slab, the burden of which will fall on customers,” he added. But if the restaurant is air-conditioned, then the tax is 18% and will make eating out a difficult proposition, fear stakeholders who have sought a 5% GST on standalone restaurants and hotels.
In addition, there are differential GST rates based on room rentals or tariffs. “While there is no GST for room rentals upto ₹1,000, it is 12% on room rent ranging between ₹1,001 and ₹2,500 and 18% on room rents above it up to ₹5,000. “However, room tariff above ₹5,000 will draw a 28% GST and will discourage tourists,” aver the association members, expressing dismay over the steep GST rates.
No change in standards
From the customer’s point of view, the standards of rooms levying rates below ₹1,000 tends to range from awful in most cases to tolerable in some cases while a standard room with no compromise on hygiene will cost anywhere between ₹2,500 and ₹5,000. But with the new GST rates, the existing facilities will cost more without any proportionate increase in the standards.
Stakeholders in the hospitality sector pointed out that even middle class tourists from the salaried sector seek comfortable accommodation that ranges from ₹3,000 to ₹4,500 per day. But a 28% GST on this tariff if it is a star property or an 18% GST for non-star category hotels will shoot up the rentals and make them unaffordable. This will impact tourism, they feared.
Mr. Prashanth of Safe Wheels, which deals with tourism promotion and car rental businesses, said that the tourists will have to pay more and this will negatively affect the sector. “I have already circulated a petition to our association members to sign and the same will be forwarded to the government,” he added.
Mysuru receives nearly 3.5 million tourists and the turnover ranges from ₹1,200 crore to ₹1,800 crore per annum. There are about 6,000 to 7,000 rooms and the accommodation ranges from budget to luxury categories. The rentals for these will go up once the GST rates are implemented.
