Thu, 19 Sep, 2019

Reduce GST rate and slash visa fees: Tourism industry to new central govt

Given that BJP won a clear majority, the new Central Government led by Prime Minister Narendra Modi is expected to be really stable. The tourism stakeholders of Goa expect the stable government to be decisive in matters concerning their industry. They expect GST to be brought down for hotels, visa fees to be slashed and several tourism friendly policies from the new government.

03rd June 2019, 02:42 Hrs

Karan Sehgal  

If there is one industry in Goa, which is at crossroads, it is tourism. Last season saw fewer international tourists, hotels struggling to fill their rooms and several tourism stakeholders barely managing to stay afloat. There were few issues with even the policy of the previous Central Government, which made things really tough for the tourism industry.  

Now that a stable government has been formed under the leadership of PM Narendra Modi,the tourism industry wants the new policymakers to take steps to help revive the industry. For a start, they expect the current goods-and-services-tax (GST) rate on hotels to be reduced. The prevailing GST rate is 28%, if a hotel charges Rs 7,500 or above per night per room. Since most premium hotels charge tariff in the same range, they have already lost a lot of business because other destinations like Sri Lanka, Vietnam and Thailand have much lesser tax rates for hotels.  

Jack Sukhija, member, Travel and Tourism Association of Goa (TTAG), said, “From the newly formed government at the centre, we would expect that they reduce GST rate on hotels to a maximum of 18%.  Ideally, we should have 12% GST rate for hotels charging tariff upto Rs 7,500 per night per room and 18% on hotels charging more than Rs 7,500 tariff.”  

Other stakeholders agreed with Sukhija’s viewpoint and urged the Central Government to reduce the GST rates on hotels. Actually, Goa has been fighting this battle for reducing GST rates for a long time now. During the previous Central Government, Panchayat Minister, Mauvin Godinho, who represented Goa in the GST Council, had made efforts to reduce GST rates on hotels, but to no avail. The matter of high GST rates was discussed in many council meetings, but it did not find favour with the then government. The tourism industry hopes that the new government will reduce GST rate on hotels.  

Shivam Verma, general manager, Royal Orchid Beach Resort & Spa, said, “GST rates, which are applicable to hotels, are very high in India. Very few countries have more than 8% GST rate on hotels. In my opinion, GST shouldn’t be more than 12% on hotels in our country. Based on tariff charged by hotels,  we should have slab based tax structure like 5%, 8% and 12%.”  

Apart from GST, there are other issues ailing tourism industry as well. For example: visa fees was hiked last year, which has affected tourists. The hike was substantial enough to badly affect the entire vacation budget of a number of foreign tourists.  

Sheikh Ismail, general manager, Concord Travels & Tours, said, “From the new central government, our main demand would be to reduce visa charges. Earlier foreign tourists visiting Goa were paying $40 per person as visa charges, which was increased to $100 last year. If the government does not reduce visa charges, then the charter flights will stop coming to Goa.”  

Foreign tourists don’t have to pay any visa fees in destinations like Maldives and Indonesia. In other countries, visa fees is much lesser. For example: a Russian tourist has to pay only $12 as visa fees to  travel to UAE.  

Often the Central Government has taken a view that Indian travellers have to pay high visa fees to travel to countries like Russia and the UK. Therefore, tourists visiting India from those countries must pay high visa fees as well.  

Ismail said, “Other countries like Russia and UK do not depend upon Indian tourists. Therefore, they are not going to reduce visa fees for Indian tourists going to those countries. But, Goa’s economy depends a  lot on tourists coming from UK and Russia. Hence, it makes sense to reduce visa fees for tourists coming  here from these countries.”  

Savio Messias, president, TTAG, said, “We will request the Central Government to reduce visa fees for tourists visiting India. We would also urge them to consider giving incentives to those tour operators,  who bring charter flights to Goa.”  

Several other countries give cash incentives to tour operators bringing foreign tourists, but India doesn’t have a policy to do that so far. Most foreign tourists arrive in Goa through charter flights, which are brought in by tour operators. They expect the government to provide them incentives for bringing foreign tourists.  Stakeholders also feel that visa-on-arrival facility should be given to more countries at Dabolim Airport.Apart from that, there are other issues with tax rules in GST regime, which need to be dealt with.  

Sukhija said, “The concept of linking GST rate of restaurant of a hotel with the tariff should be removed. At the moment, if a hotel is charging more than Rs 7,500 per night tariff on even one room, the GST rate applicable to its restaurant is 18%. To my mind, GST rate for all restaurants should be 5%.”  

It is clear that the Central Government will have to play a vital role to revive tourism in Goa. In the days to come, tourism industry will also make efforts to meet the government to put forth their viewpoint. It remains to be seen to what extent the government will listen to their demands.  

What the tourism industry expects from the Central Govt

The industry expects reduction in GST rate on hotels. At present, if a hotel charges Rs 7,500 or above per night per room, the tax rate is 28%.  

Due to this, Goa has already lost a lot of business to other destinations. Industry expects GST rate to be maximum 18%, or even lesser, for hotels.  

Their other demand is visa fees should be slashed for foreign tourists visiting Goa. Earlier foreign tourists visiting Goa were paying $40 per person as visa charges, which was increased to $100 last year.  

The industry fears that charter flights would stop coming to Goa if visa fees is not reduced. It also expects visa-on-arrival facility to be given to more countries at Dabolim Airport.  

Other destinations in South-East Asia charge lesser visa fees. So, Goa loses out to competition due to higher visa fees as well.  

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