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gstindia.com/tourism-hospitality-sector-sceptical-about-implications-of-gst-bill/
The 122nd Constitution Amendment Bill, 2014 commonly termed as Goods and Services Tax (GST) Bill was passed
with unprecedented unanimous approval in the Rajya Sabha the Upper House of the Indian Parliament on August
3, 2016.
Recently the Federation of Associations of Indian Tourism & Hospitality (FAITH), the umbrella association of all the
national associations in the travel, tourism and hospitality sector in the country, called on Bhupinder Yadav,
Chairman, Rajya Sabha Standing Committee on GST and highlighted that under the draft GST Bill, the definition of
Export of Services does not includes the tourism and hospitality sector. As a result, whatever benefits will be
conferred on the export players after the finalisation of the bill will not reach the tourism and hospitality sector until
the definition is updated. Very soon FAITH along with industry representatives will be meeting the concerned officials
again to submit specific solutions.
Presidents from the other travel trade associations feel it is too early to talk about the bill as it is still in the draft
stage. However, they are now eager to put on their thinking hats and understand the GST Bill and its consequences
on the tourism sector. Speaking in unison, they agree that to spread the right understanding about the bill among
their members and address the challenges to the government officials, if any.
As is being said, this will pave the way for a unified common tax regime in India thereby eliminating state boundaries
and making India One Country One Tax soon. With the implementation of GST, not only the GDP is expected to
grow by 1.5-2%, India will also be seen as an economy where the ease of doing business factor will improve by
leaps and bounds.
GST Bill will be placed in the Parliament for approval. Likewise, 50% of the states have to pass the Constitution
Amendment Bill post which it will be implemented from April 1, 2017, making this the most significant tax reform
since the countrys independence and the next big step forward since the 1991 liberalisation, catapulting India into
the league of big players in the world economy.
Frontrunners in the sector highlight the implications of the GST Bill on the tourism and hospitality sector:
The service tax got operational way back in 1997 and we are still struggling with consultants in understanding the
abetment procedure which is why there are a number of cases still pending. We dont want the same story to be
repeated.
Collectively under FAITH, we have highlighted the above concerns and will be approaching the government soon
with specific solutions. As a leading trade association, our major action would be to understand the bill once it is
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finalised. We also hope that the government empathises with the much talked about travel and tourism sector.
Aviation Turbine Fuel is currently treated separately from other petroleum products for claiming mod vat credits and
if ATF is not brought under the GST regime there would be substantial cost impact on ATF used in our member
aircraft due to cascading duties leading to price increases. We are also hopeful that in order to lower compliance
cost, network industries like express industry, banks, etc. will only need to do single centralised registration under
the GST regime as is the case with service tax registration presently.
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the confidence among international investors and their belief in the India growth story.
From the perspective of Indias travel services sector, currently saddled with multiple taxes, levied by both the
Centre and the states, optimisation of taxes and ease of doing business has been the key ask of our industry and
hence the GST Bill passage even more welcome! It is still a wait and watch on how the abatement/ presumptive tax
based provisions available currently to the tour operators, money changers and air travel agents are transitioned in
the GST regime.
Under the GST regime, it is expected that supplies of hotels and restaurants, a major cost component of tour
services, will be subjected to a single tax, resulting in reduction in the cascading effect of taxes and hence increased
cost efficiency to benefit travellers. However, for this benefit to play out effectively, it is necessary that all the B2B
supplies are made fully creditable and the credit flow is seamless across the states. This aspect will probably require
some deliberations.
Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=24928&sid=1
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