GST may cripple AP hotel business

Visakhapatnam: At a time when Andhra Pradesh is already struggling to attract tourists, the introduction of the Goods and Service Tax (GST) rates will deal a major blow on medium and small hotels.

The already ailing tourism sector could be crippled further with a proposed GST of 18 per cent to be levied on air-conditioned eateries and hotel rooms priced between Rs 2,500 and Rs 5,000.

Hoteliers said the new tax rate would drive room rentals far too high to attract tourists from other parts of the country in the context of international air travel and accommodation becoming more affordable for the middle class.

Rooms priced above Rs 5,000 will attract a whopping 28 per cent tax. Hoteliers said the collection of 18 per cent GST would place a heavy burden on the common man as food in hotels will be dearer and thus, eating out will become more and more infrequent.

General secretary of the Andhra Pradesh Hotels Association (APHA) T. Satyanarayana said the Union government’s decision to impose 18 per cent GST on air-conditioned hotels would affect the business of many restaurants and hotels in Andhra Pradesh and it would place an unbearable burden on the common man. Taxes in countries like Singapore, Thailand, Indonesia and few other countries are below 10 per cent only. The GST rates on hotel industry are too high and not viable and, moreover, tourists will simple skip India and Andhra Pradesh, he added.

In 2016, AP got about 2.6 lakh foreign tourists and over 12.5 crore domestic tourists. But of the total foreign tourists having visited India in the past few years, less than 4 per cent has visited AP.

GST rates on hotels and restaurants might not have much effect on the inflow of foreign tourists, but it would definitely affect the inflow of domestic tourists to AP, as many domestic tourists were middle class and above middle class families, said T. Janardhana Rao of the APHA.

As per GST, hotels and lodges charging per-day tariff of Rs 1,000 will be exempt from the tax, while those charging up to Rs 2,000 per day will pay 12 per cent. Hotels charging Rs 2,500 to Rs 5,000 will pay 18 per cent and those with per-day tariffs above Rs 5,000 will be levied GST of 28 per cent.

Demanding the government to reconsider GST, APHA members will observe state-wide bandh on Tuesday.