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. Particulars Service Tax Applicability Gujarat Vat Applicability Other Taxes Applicability Remarks
1 Room Rental 9%
(40% Abatement)
Not Applicable Luxury Tax Applicable No Service Tax if tariff for room per day is less than Rs. 1,000/-

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

2 Restaurant Services 6%
(60% Abatement)
Vat at full rate or composition scheme with No Vat Credit Not Applicable No Service Tax if Non- AC Restaurant is Serving Food or on Take Away.

Abatement only if No Cenvat Credit on Input & Capital Goods

3 Exhibition Services 15% Not Applicable Not Applicable No Service Tax if place of Exhibition is out of
India
4 Rent a Cab Services 6%
(60% Abatement)
Not Applicable Not Applicable Abatement only if No Cenvat Credit on Input, Input Service & Capital
Goods taken
5 Air Tickets 6%
(60% Abatement in case of Economy Class)9%
(40% Abatement in case of Other Class)
Not Applicable Not Applicable No 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
6 Train Tickets 4.5%
(70% abatement)
Not
Applicable
Not Applicable Abatement only if No
Cenvat Credit of Input, Capital Goods if abated rate is charged.
7 Bundle Services by Hotel, Resorts 10.5%
(30% abatement)
Vat at full rate or composition
scheme with No Vat Credit
Luxury Tax Applicable Abatement only if No Cenvat Credit of Inputs
under excise chapter 1 to 22 of CETA,1985
8 Money changing
Services
Slab wise Service
Tax
Not
Applicable
Not Applicable
9 Cruise & Ship Transportation
Services
15% Not Applicable Not Applicable
10 Entertainment Parks & Sports Activity 15% Not Applicable Entertainment Tax Applicable in specified cases No service tax in case the entry fee is less than Rs. 500
11 Entry Fees to Monuments, Public Place, Shows & Sight Seeing Places 15% Not Applicable Entertainment Tax in certain category No Service Tax for entry to Museum, National Park, Wild Life Sanctuary, Tiger Reserve, Zoo, Circus, Dance Club, Drama, Cinema Hall or Theatre
12 Retail Packed
Food & Beverages Sell
Not Applicable Vat Applicable at 5% or 15% as per product
classification
Not Applicable
13 Visa Services 15% Not Applicable Not Applicable No Service Tax on Fees by embassy only on service charges of agent
14 State Transport Services 15%
(In case of AC Service)
Not Applicable Not Applicable No Service Tax if Non- AC Vehicle
15 Tour Operator 9%
(40% abatement )
Not Applicable Not Applicable No 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. Particulars Place of Supply Applicable 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%

In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST application and GST online. You can also use our GST software for doing end-to-end GST compliance.