FAITH seeks amendments in GST law

FAITH logoThe Federation of Associations in Indian Tourism and Hospitality (FAITH) has sought amendments to the draft Goods and Services Tax law that include making an exception for tourism and hospitality businesses, and classifying them under 6-8 per cent tax slab. FAITH has asked the GST commissionerate and the revenue secretary to provide an amendment under Section 2 (44)c to the tourism & hospitality industry. According to a letter from FAITH, Section 2(44)c, under the draft GST model law describes an export service as one which is rendered abroad. FAITH has put forwarded the rationale that tourism services to foreign exchange paying tourists can’t be rendered abroad as all our destinations are within India and it is an intangible product & hence an exception needs to be provided in the law itself to the tourism & hospitality industry. Once tourism & hospitality is classified as an export service, FAITH will request the GST council for a 0% rating of GST on tourism & hospitality exports. This will make our tourism industry extremely competitive globally & remove the uncompetitive 18-25% indirect taxation. FAITH will also ask the GST council for a below 10% GST rating on domestic tourism. This is in line with global practices where the introduction of GST has seen tourism GST kept at less than half the standard rate of GST. Implementation of both of these recommendations have the potential to spur our tourism forex earnings to $30-$35 billion from 13-15 million foreign tourists & has our domestic tourism to 1.8- 2 billion domestic visitations. This could double the employment induced by tourism to 9 crore jobs from 4.5 crore jobs. They have also shared their concerns with the tourism secretary & with the tourism minister who has promised to personally deliver the GST recommendations to the finance minister.

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