Impact of the GST on the Development of Hospitality and Tourism Sector in India

Sherry Abraham ,M Venkataramanaiah

doi:10.11594/ijmaber.01.01.04

Abstract

Tourism is one of the prime activities which play a vital role not only in the generation of employment and income but also in holding firm sociopolitical relationship with the other countries.India is one of the most fascinating destinations to the world tourists as it is known for its diversity in culture, languages, rituals, traditions, ethnicity with rich civilization. The tourism sector in India is one of the rapidly growing sectors. It contributed 9.2 percent of GDP in 2018 and is expected to contribute 9.9 percent of GDP by 2028.Goods and Service Tax (GST) is said to be a non-discriminatory tax, which affects various layers of the economy. The recent rate cuts announced by the GST council are expected to yield good results in the promotion of hospitality and tourism business in India. Generally, rationalization of GST rates is a positive step taken by the policymakers and it augments this sector to a great extent. It is expected that the rate cuts will give a boost to the tourism which in turn brings a good number of job opportunities in the sector. At this juncture, an earnest attempt has been made to analyzethe post-effect on the hospitality and tourism sector after the implementation of GST and the consequent amendments therein.

Highlights

The tourism sector is one of the rapidly growing sectors in Indian Economy
Objective of the Study The primary objective of the present study is to investigate the impact of Goods and Service Tax (GST) on the performance of the hospitality and tourism sector after GST implementation
Taking the reference period (2nd July 2017) into consideration, the introduction of GST may be caused to decline in the contribution of travel and tourism to GDP coupled with other structural adjustments of economy

Summary

Introduction

The tourism sector is one of the rapidly growing sectors in Indian Economy. It is predicted that the contribution of the sector increases from US$136.2 billion in 2016 to US$ 275.2 billion by 2025. There were many fears about the impact of GST on the performance of Hospitality and Tourism industry and still they are prevailed in some forms. India on 2nd July 2017 is expected bring many changes to address the problems existed in the previous tax regime. The expectations were include reduction of business transaction costs, reduction of cost of customers, balancing taxes, etc. As per the report of World Travel and Tourism Council (WTTC), India ranks 7th position in world in terms of its contribution to GDP. Impact of the GST on the development of hospitality and tourism sector in India.

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Discussion

Conclusion