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Monday, 04 December, 2017, 15 : 41 PM [IST]

Proposals & Disposals

What is true with the Gods is also true to with the governments. People only have the privilege to propose, how it is disposed by the ‘Gods’ is beyond assumptions and presumptions. That is what exactly happened with the hospitality industry’s proposal to the GST Council to ‘rationalise’ the tax structure applicable to restaurants. No one in their wildest dream expected the Council to reduce it to a uniform 5% from the prevailing 18% and 12%. It looked like an unexpected bonanza initially for hospitality and food service businesses. But the GST Gods had a different agenda this time around. When they were more than magnanimous to the consumer, at a crucial election time, had taken away the incentive of Input Tax Credit (ITR) from the industry. Those who lobbied hard for GST rationalisation on restaurants had to repent the way things turned out at the end of the day.

However, it seems what has ruffled the sentiments of organised industry not the decision to withdraw the ITC, but the decision to extend the threshold for composition from INR 1 cr to INR 2 cr. The industry believes that the decision to increase the threshold has been driven largely by political expediency of the government to buttress the small traders in a critical election bound state. They fear misuse of composition scheme by unscrupulous entrepreneurs thereby eating into the business of the organised businesses.

For the tourism industry, the last GST Council meeting in Guwahati had left a glimmer of hope as far as upper limit of 28% which is applicable on hotels in the country. There has been at least a consensus in the Council to reduce the maximum tax incidence from the current 28% to 18% over a period of time. It is also heartening to see that the Tourism Minister of the country who took a very orthodox stand on taxes connected to tourism industry initially, changed it to be on the same page on the issue with the industry

While key favourable decisions of the government vis-à-vis the tourism industry takes pretty long time compared to other industries of the economy, what is actually bothering the industry is the continued negative publicity the country gets on international media. Before the issue of murderous assault on the foreign couple in Agra died down, the issue of deadly smog and pollution in the capital city of Delhi and North India hogged the headlines in international media. Unfortunately, key Indiatourism offices and officials who could have come handy in putting the records straight at times of such adversities are missing for so many years because of government’s indecision!

P Krishna Kumar
Bureau Chief, New Delhi
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