By Aabha Raveendran

Copyright thehindu

With the implementation of the new Goods and Services Tax (GST) rates on September 22, budget travel in the country is expected to become much cheaper. Tourism entrepreneurs have heaved a sigh of relief as the changes are likely to boost domestic tourism.

Low-end rooms (up to ₹7,500) are getting cheaper with GST rates cut to 5% from 12%. The GST for luxury rooms (above ₹7,500) remains unchanged at 18%. “This is definitely a positive sign. Lower room rent attracts more tourists. The lower GST rates will also encourage entrepreneurs to be forthcoming with their tax payment,” said Rajan T.P., a homestay entrepreneur in Kozhikode and the district secretary of the Kerala Homestay and Tourism Society.

There is no change in the GST for passenger transport services by motor vehicles where the fuel cost is included in the charges. The GST rate for renting motor vehicles also remains at 5%. “We do not have to worry about transportation charges, and with lower room rent, the overall package cost may come down slightly, which is positive,” said Shinan M.C., a travel operator from Kannur.

While the GST rate has not changed for air travel in economy class (5%), travel in other classes will become costlier, with the rate rising from 12% to 18%. There are no changes in GST for the restaurant sector either.

“We were concerned that the GST rates might go up. It would have affected tourism start-ups more than seasoned entrepreneurs in the sector,” said Shaji Kallai, vice-president of the Kerala Tourism Travel Consortium. “While a higher GST may not be an issue for foreign tourists, domestic tourists always look for lower-budget packages while expecting the best services. With lower GST for rooms, we may be able to provide them better service,” he added.

Mr. Rajan also feels that the government’s support for the tourism sector in this manner is likely to attract more youngsters to set up tourism startups.