‘High GST on hotels will be a deterrent’

Debjit Dutta, Chairman, IATO East Chapter, said that the announced tax slab on tour operators is satisfactory but because hotels are a major component of their business, the 28 per cent tax on hotels above Rs. 5000 will hit them in a bad way. “Most inbound tourists want to stay in properties that are well above the Rs. 5000 bracket. The business model for inbound is also different from that for domestic – we create our deals and packages about a year in advance and with the new tax rate for hotels, we will have to pay the 28 per cent and five per cent, in addition to the standard rate of the hotel room. This barely leaves us with any profit margin. The tax rate needs to be reconsidered since it will kill a lot of business where most of the hotels will benefit from direct booking. In addition, with neighbouring countries coming up in a big way such as Sri Lanka, the products and tax rates need to be competitive,” he added.