Introduction

Total contribution by travel and tourism sector to India’s GDP is expected to increase from US$ 136.3 billion in 2015 to US$ 275.2 billion in 2025. The growth rate of the tourism sector of Indian economy was recorded as 17.3%  in the previous year. The foreign exchange earned by tourism sector is worth 21,828 crore rupees.

According to report of the World Travel and Tourism Council (WTTC), India’s travel and tourism sector ranks 7th in the world regarding its aggregate commitment to the nation’s GDP.

For raising the awareness on the importance of tourism for the country’s economy, January 25th is marked by the Indian government to be observed as the National Tourism Day in India.

The tourism industry provided more than 23.5 million jobs in 2015 and the employees that work in the tourism industry is over 9% in 2016.

Current Regime for Tourism Sector

Sr.No.ParticularsService Tax ApplicabilityGujarat Vat ApplicabilityOther Taxes ApplicabilityRemarks
1Room Rental9%
(40% Abatement)
Not ApplicableLuxury Tax ApplicableNo Service Tax if tariff for room per day is less than Rs. 1,000/-

Abatement only if No Cenvat Credit on Input & Capital Goods.

2Restaurant Services6%
(60% Abatement)
Vat at full rate or composition scheme with No Vat CreditNot ApplicableNo Service Tax if Non- AC Restaurant is Serving Food or on Take Away.

Abatement only if No Cenvat Credit on Input & Capital Goods

3Exhibition Services15%Not ApplicableNot ApplicableNo Service Tax if place of Exhibition is out of
India
4Rent a Cab Services6%
(60% Abatement)
Not ApplicableNot ApplicableAbatement only if No Cenvat Credit on Input, Input Service & Capital
Goods taken
5Air Tickets6%
(60% Abatement in case of Economy Class)9%
(40% Abatement in case of Other Class)
Not ApplicableNot ApplicableNo Service Tax if journey started or terminated in the state of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or Bagdogra in West Bengal. Abatement only if No Cenvat Credit on Input & Capital Goods
6Train Tickets4.5%
(70% abatement)
Not
Applicable
Not ApplicableAbatement only if No
Cenvat Credit of Input, Capital Goods if abated rate is charged.
7Bundle Services by Hotel, Resorts10.5%
(30% abatement)
Vat at full rate or composition
scheme with No Vat Credit
Luxury Tax ApplicableAbatement only if No Cenvat Credit of Inputs
under excise chapter 1 to 22 of CETA,1985
8Money changing
Services
Slab wise Service
Tax
Not
Applicable
Not Applicable
9Cruise & Ship Transportation
Services
15%Not ApplicableNot Applicable
10Entertainment Parks & Sports Activity15%Not ApplicableEntertainment Tax Applicable in specified casesNo service tax in case the entry fee is less than Rs. 500
11Entry Fees to Monuments, Public Place, Shows & Sight Seeing Places15%Not ApplicableEntertainment Tax in certain categoryNo Service Tax for entry to Museum, National Park, Wild Life Sanctuary, Tiger Reserve, Zoo, Circus, Dance Club, Drama, Cinema Hall or Theatre
12Retail Packed
Food & Beverages Sell
Not ApplicableVat Applicable at 5% or 15% as per product
classification
Not Applicable
13Visa Services15%Not ApplicableNot ApplicableNo Service Tax on Fees by embassy only on service charges of agent
14State Transport Services15%
(In case of AC Service)
Not ApplicableNot ApplicableNo Service Tax if Non- AC Vehicle
15Tour Operator9%
(40% abatement )
Not ApplicableNot ApplicableNo Service Tax in case service is provided to foreign tourist for tour conducted wholly outside India

Abatement only if No Cenvat Credit of Input, Capital Goods taken.

Abatement only if cost of tickets, accommodation is
also included along with the tour operator charges

 

Impact of GST on Tourism Sector

Sr.No.ParticularsPlace of SupplyApplicable Taxes
1

Room with rental upto Rs. 2000.

Location of Hotel, Guest
House, Club, Resort, boat, vessel

No Tax

2

Room with rental from Rs. 2000 to Rs. 7500

Location of Hotel, Guest House, Club, Resort, boat, vessel

18%

3

Room with rental above Rs. 7500

Location of Hotel, Guest House, Club, Resort, boat, vessel

28%

4

Restaurant Services turnover of less than Rs 50 lakh

Location of Restaurant

5%

5

Non-AC restaurants

Location of Restaurant

12%

6

AC restaurants

Location of Restaurant

18%

7

5 star rated

Location of Restaurant

28%

8

Rent a Cab Services / Air Tickets/Train Tickets/Cruise & Ship Services/State Transport Service

Location of Service Recipient if recipient is registered

5%

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