A final rule regarding the new GST rates have been decided by the Goods and Services Tax Council. Various hotels and restaurants now have GST rates that are dependent on their turnover and tariffs. With this news, the industries welcomed mixed reactions from those are affected by the new decision. Good thing that this law is exclusively only to the country thus if you planning to stay in a 5 star boutique hotel in Bangkok then you will not be facing additional GST.
Budget hotels will have very little tax or, in some cases, will not be affected by the GST rates such as those that are charging room rates that are not higher than Rs 1,000. Hotels with room rates stating at Rs 5000 or higher for an overnight stay will be charged with a 28 per cent GST. This decision has caused many experts in the industry to be quite disappointed. Hotels that are included in the bracket with restaurants inside their premises will also be subjected to the GST rate of 28 per cent.
According to the managing director of consulting firm HVS under the consulting and valuation practice department, Achin Khanna, a levy worth 28 per cent for all luxury and 5-start hotel accommodations can be considered as a decision lacking in foresight.
He added that the said rate will mainly affect the consumers. Khanna shared that hotels with an overnight charge of Rs 5,000 or more does not necessarily imply that they are a luxury accommodation or it does not mean that they are only accepting guests that are travelling based on their wants.
EY’s partner when it comes to indirect tax practice, Suresh Nair, explained that the high tax which will be charged to premium hotels will negatively affect the industry considering that the rates are already in the acceptable range before tax was added. Further disappointments will be felt by consumers because of the 28 per cent tax that is also charged in restaurants within luxury hotels.
This is the reason why 5 star boutique hotel Bangkok are still affordable despite the standard of the facilities because they recognize the importance of these establishments in the economy of the country as well as its effect on the tourism of the nation. India should take a page from Thailand’s book in this matter.