Online firms hit GST revenue mop-up from Shimla hotels

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Unethical practices by online travel companies for booking rooms at low prices in illegal homes and flats have severely hit the occupancy of medium and budget hotels and offline travel companies are on the verge of closure. The effect is visible and in April this year, the occupancy of hotels remained around 30 percent and even during the peak season of May and June, the occupancy remained around 70 to 80 percent that too on the discounted tariff, says president, Tourism Industry Stakeholders Association, Mohinder Seth.

Comparison of the data of luxury tax and the GST collected by the government in Shimla points out that even after the implementation of GST, there has been no increase in the revenue. Earlier, the government was getting Rs 12 crore by way of the luxury tax, which was 10 percent, out of which around 70 percent was contributed by medium, small and budget hotels, a release here said.

In 2018-19, the tax collection by way of GST, that replaced the luxury tax, from hotels remained same despite the fact that the taxation rate of bigger hotels, covered under the slab rate of 28 percent, had increased three times, Seth said, adding that the contribution of small, medium and budget hotels had decreased by 50 percent for which online companies were responsible.

Due to low rates offered by online travel companies in unregistered hotels and flats and mushrooming growth of “Bread & Breakfast” and homestay units, there was a decline in occupancy of hotels and due to which the viability of the hotels had come under threat.

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