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 |
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 |
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% |
