The GST Council in its meeting during the 28 – 29th June, is likely to consider giving relief to the tourism and hospitality industry.
The relief can be given in the form of introducing a new margin scheme.
As per the news, the applicable effective rate of GST on the tour operators is currently too high according to the tour operators. Most of them pay GST @5% (Without ITC).
Taking note of above, and the arguments by the tour operators along with various cases before representatives of the GST Council and the GST Secretariat, the demand has been examined by the fitment committee.
The suggestion made by the fitment committee is that if the GST Council could consider a new margin scheme for the tourism and hospitality sector, the points put as above could be relieved.
If the Council agrees to the proposal moved, then a new margin scheme could be introduced. The GST then be paid on the value which will be arrived on a deemed basis.
The aforementioned deemed value can be decided by considering certain % on gross tour cost. The same will represent a fair competitive margin.
However, they should not be allowed to avail ITC.
The above could be allowed where the tour includes/inclusive of either of the following:
If the above proposal is agreed to by the Council, then the new scheme will be designed in a month’s time.
Also, it could give the tour operators an upper edge, by making the tax incidence competitive.
In addition to the above, the Council is likely to give clarity on the amount levied to GST in case of tours conducted partially in and partially outside India for the foreign tourists.
Source: CNBC TV 18
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