MICE & Wedding Industry players set to benefit from the new tax policy

The GST Council chaired by finance minister, Nirmala Sitharaman recently announced revision of tax rates on hotel tariffs in order to meet the targeted growth for the industry. It approved the proposal to cut rates on hotel tariffs. 

This move is expected to boost to the sector, which has been reeling under pressure of an economic slowdown. The move is also expected to serve a dual purpose of boosting tourism and generating more employment.

Reduction in tax from the peak rate of 28% to 18% for hotels having tariff of more than Rs 7,500 and from 18% to 12% for hotels having tariff less than Rs 7,500 will also have a positive impact on sectors like MICE and destination weddings and thereby the entire tourism industry. Moreover, there will be no GST on room tariffs of below Rs 1,000 per night.

Speaking about the impact of this move Vishal Suri, Managing Director, SOTC Travel said, “ Ahead of the peak holiday season, the revised GST rates for hotels will go a long way in strengthening the Leisure, MICE and Corporate Travel businesses and will further contribute to the growth of the Tourism sector. With the lowering of corporate tax rates from 30 to 22 per cent, we are now at par with South Asian countries. "

He further added, “The reforms undertaken by the Government will help businesses with higher post-tax profits and hence incentivize investments into the country, reviving the current economic growth rate. We are hopeful to witness a rise in demand and bookings”.

Some experts also believe that this step by the government should also be backed by developing tourism infrastructure and lowering the tax slab in the mid-market segment which is the need of the hour to boost the hospitality sector. 

Speaking about the tax cut, Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Limited  said, "We truly welcome the announcement of the Finance Minister on the government’s planned amendments in the Income-tax Act. This move will certainly see infusion of positive sentiment in the industry at large, more so in the current environment. With the overarching intent of catalysing  growth and investment, we anticipate positive impact for the Travel & Tourism sector, and with it a boost to our Corporate and MICE travel segments as well."

He also added, " The reduced corporate tax makes it one of the lowest in Asia and brings with it much desired impetus to investments in the country, also a boost to demand-consumption and hence augurs well as an overall  economic stimulus. The multiplier impact to employment generation is equally significant. Additionally, the much anticipated reduction in GST for the hospitality industry is a shot in the arm for the sector in creating a competitive playing field versus destinations in the Asian region and hence cascading positive impact to Inbound, domestic, business travel and MICE segments." 

Commenting on the new tax policy by the government, Neeraj Govil, Senior Vice President, South Asia, Marriott International said, “The recent tax cut move will impact the hospitality industry in a positive way. Sectors like MICE will especially benefit because we the industry can now look at local options. This is a welcome move and will benefit the industry in the long run.”