Less than two weeks are left before Union Budget is announced on February 1. Finance Minister Arun Jaitley has received many recommendations in his pre-Budget meetings from industry representatives. The restaurant business body National Restaurant Association of India (NRAI) has sought the restaurants should be given the Input Tax Credit (ITC) benefit, which was taken away from them after the November GST Council meeting.
NRAI chairman Rahul Singh said keeping the hotel industry out of the ITC was not beneficial as other sectors like banking, insurance, and real estate were already getting the ITC benefit. Singh demanded this year's Union Budget should give Input Tax Credit benefit to restaurants, and sought setting up of a single window clearance system.
SIMPLIFY LICENCE PROCESS
The association also said currently one needed to obtain as many as 23 lincences to open a restaurant, and that the process needed to be simplified. He hoped the government would consider their recommendations and provide relief. The GST Council in November reduced the tax rates of 18 per cent (on restaurants) and 12 per cent (hotels) to 5 per cent but took away the benefit of Input Tax Credit from the industry.
STARTUPS SEEK TAX CUT
Startups that aggregate hotels for consumers and provide rooms at cheaper prices are also reeling under high GST. The industry says the government should reduce the corporate tax to 25 per cent from 30 per cent and that the GST on hotel accommodations should be levied on actual tariff instead of declared tariff. "GST is a progressive step towards reforming India's tax structure, and is aimed at increasing the efficiency in logistics, regulating the unorganised sector, and defining the treatment for e-commerce players. In its current form, in certain cases, customers actually end up having to pay a higher percentage of tax than they should. GST levied at hotels is calculated on the declared room tariff, as opposed to the actual tariff being paid by the customer while booking. Given the nature of the business, a hotel inventory is dynamically priced, and room tariff varies, depending on the season, demand, and location, besides other variable factors," said Sidharth Gupta, co-founder, Treebo Hotels.
TRAVEL AND TOURISM
The travel and tourism industry has also demanded a cut in GST in the upcoming Budget. The tax benefit could boost job creations in the industry that employees over 40 million people in India. Earlier reports also suggested Finance Minister Arun Jaitley was also in view of lowering the 28 per cent GST on hotel tariffs. Besides, the government may also launch initiatives to boost private investments. Tourism Minister KJ Alphons recently told Parliament that more resources were needed to create new infrastructure and tourist packages. India needs to revive hotel infrastructure by attracting investment in less-developed tourist areas.