The GST Council has decided to cut GST rates for Hoteliers so as to boost the tourism and hospitality industry.
Hoteliers would now have to pay zero GST for room charge of upto Rs 1000 per day room charges between Rs 1001 to Rs 7500 would now have to pay 12% GST as opposed to the earlier rate of 18%. For rooms charged Rs 7500 per day and above 18% GST would be charged as opposed to 28% which was charged earlier.
There is also good news for the catering industry as outdoor catering services would be now charged 5% GST as opposed to the previous rate of 18%. The hospitality industry has been voicing the need for moderating GST rates for long. A delegation of hoteliers had also met Nitin Gadkari, Minister for Road Transport & Highways and Shipping and Ministry of Micro, Small and Medium Enterprises.
Indian economy was hit by fears of a slowdown as GDP growth rate during the first quarter of 2019-2020 (April to June) remained at 5% the lowest in the past 7 years. The growth rate for Quarter 1 of 2018-2019 remained at a robust 8%. The slashing of GST rates is very timely considering that the festival season, the wedding season and the winter season (which is the tourist season in India) are approaching.
The third and fourth quarter of the year is crutial to the travel, trade and hospitality sector.