Hospitality Industry In India

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Hospitality Industry In India

Hospitality Industry in India accounts for almost 7.5 percent of the country’s GDP. In recent years, this industry is having a positive growth. A wide range of activities falls under the hospitality industry and it provides various jobs directly and indirectly.  This industry is one of the most important foreign exchange earners in the country and attracts a huge amount of FDI (Foreign Direct Investment). It is also a significant contributor to indirect tax revenue at the state and central level which includes revenues from VAT, Service Tax, and Luxury Tax etc. In India, the Hospitality Sector is expected to grow at 16.1 per cent CAGR to reach Rs 2,796.9 thousand crores in 2022 according to a report.

Hospitality Industry

There is a huge tourism potential in the country and as a result hospitality industry will continue to grow at a substantially higher rate. The hospitality industry was one of the most heavily taxed industries and multiple layers of tax were added such as VAT, service tax, luxury tax, which ranges from 20 – 30%. Operational costs increased and so there was a decrease in profit due to multiple taxations. Though the introduction of Goods and Services Tax (GST) has brought many benefits, there is an urgent need of lowering the levied tax, to incentivize and attract more investments to the sector.

Another important requirement is infrastructure development which is essential for the growth of the hospitality industry. India is projected to be the fastest-growing nation in the wellness tourism sector in the next five years and infrastructure development is an inevitable factor in order to support this growth. Various Hotel Management Institutes are coming up these days with various training and placement opportunities.

The government should promote the luxury items industry which will promote the luxury brands which in turn will bring niche people from across the globe. The government should also provide service tax exemption for new developments and a longer tax holiday for new hotels and resorts that will help in attracting investments into the industry. Also, the tax rate for the sector needs to be lowered from the proposed 18% tax slab under consideration for the new GST regime.

The hospitality industry relies on a host of enabling the ecosystem to function and has a reciprocal relationship with several other sectors like transportation, entertainment, aviation etc. Simple clearance for real estate and hospitality projects is a primary requirement. The hospitality sector can become a major driver in the GDP of the country. It, however, will be possible only with the right amount of support and incentives from the government in all categories of hotels and not only limited to the luxury and ultra-luxury segment. I believe that the government must provide its full support in incentivizing the sector and the overall taxation on the hospitality sector should be reduced to stimulate its growth and bring India at par with other leading nations in regards to the hospitality sector.

By | 2017-12-05T10:10:49+00:00 November 27th, 2017|Blog|0 Comments

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