The cost of travel for economy class passengers is likely to remain same.Economy class air travel will become cheaper with tax rate fixed at 5% against the existing 6%, under the upcoming goods and services tax (GST) regime from 1 July. However, for those travelling business class, tickets will become dearer as the tax will go up from 9% to 12%.In the current competitive scenario, the airlines are not expected to pass on increased tax burden to passengers as it might affect their occupancy rates
The proposed slab is steeper than the current tax rates with items of mass consumption such as foodgrains will be taxed at 5% as opposed to the current 6%, while processed food will be charged at 12% as opposed to the current 15%
Here’s a detailed analysis of impact of GST on hotel business and restaurants.
- Restaurants with a turnover of less than Rs 50 lakhs: tax rate of 5%.
- Non-ac restaurants: 12% tax.
- AC restaurants: 18% tax.
- Five-star restaurants: luxury tax of 28%.
- Hotels, lodges with tariffs less than Rs 1,000: 5% tax.
- Hotels, lodges with tariffs between Rs 1,000- Rs 2,500: 12% tax.
- Hotels, lodges with tariffs between Rs 2,500- Rs 5,000: 18% tax
The hospitality industry, like every other sector in the Indian economy, pays multiple taxes (VAT, luxury tax, and service tax) in the existing indirect tax regime. A hotel where the room tariff exceeds Rs 1,000 is liable for service tax at 15 percent. An abatement of 40% is allowed on the tariff value bringing the effective rate of service tax down to 9%. The Value Added Tax (ranging between 12 percent to 14.5 percent) and luxury tax will still apply.
Entertainment is a big part of our lives. Most of us who work 10-12 hour jobs through the entire week want to go out, watch movies or visit some new places to relax on our days off. In this article, we will discuss the impact of GST rates on the entertainment industry and whether or not it is becoming expensive under GST
In movie theaters (multiplexes), food and beverages are taxed at a VAT of 20.5% and an average of 30% tax is levied on tickets, depending on the state.Movie tickets will attract GST at 28%. As food and beverages fall under the supply of food/drinks in outdoor catering, they will attract 18%. Thus, we see that the GST rates for the entertainment industry are lower than the VAT and Service Tax.
