Unrealistic GST Leaves Kerala Houseboats in Choppy Waters

High GST for Houseboats

Thiruvananthapuram: Confusion prevails among houseboat owners in Kerala due to the lack of clarity in terms of implementation of Goods and Services Tax (GST) in the sector. Houseboats have not been specifically mentioned on the GST list but the sector is included in hotel category. As such houseboats with tariffs between Rs. 2,500 and Rs. 7,500 attract 18 per cent GST while luxury and deluxe boats with tariffs above Rs. 7,500 have been imposed 28 per cent GST.

“We are yet to have a clear picture on GST in houseboat sector. Even if the GST is 18 per cent, it is not going to do any good to the sector. It is a very high rate, considering the fact that service tax before the implementation of GST was only 9 per cent. The present GST rate will ruin the sector as customers are not going to accept steep price hike. We urge the government to include the sector in the tour operator category instead of in the hotel category and reduce the GST rate to five per cent,” says, Josekutty Joseph, President, All Kerala Houseboats Owners Association.

Prior to the implementation of GST, houseboat business was charged a service tax of 9 per cent along with luxury tax, which was under compounding scheme. There are around 1100 registered houseboats in the State and together they provide employment to around 8000 people. The annual turnover is pegged at around Rs. 630 crore. However, the houseboat industry is going through a lean patch of late. The liquor policy of the previous government combined with competition from Sri Lanka and unlicenced houseboats have made the industry struggling to stay afloat.

“GST has come as a punishment for the organised houseboat industry. They are forced to pay high taxes which will adversely affect the houseboat business. On the other hand, there are several number of boats operating illegally without licence or registration. They will be benefited a lot as they are outside the radar of GST,” says Riaz Ahmed, Managing Director, Abad Hotels and Resorts.

KTM Society Submits Representation to Chief Minister

The Kerala Travel Mart Society has submitted a representation to Pinarayi Vijayan, State Chief Minister, urging steps to reduce the GST rate on hotel and houseboat industries. “Tourism is one of the major contributors to Kerala’s growth, generating 25 lakh jobs as well as 10 per cent of the State’s GDP. The new GST structure on tourism industry is the highest in the world and is seriously affecting the sustainability of the tourism business. Presently, the tax is 38 per cent on tour packages for domestic travellers and 33 per cent for inbound international travellers. This includes the taxes on both hotels and tour operators. We have sought the intervention of the Chief Minister to convince the GST Council to reduce the tax structure for the tourism sector,” said Abraham George, President, Kerala Travel Mart. K V Thomas MP, who was part of the delegation which met the Chief Minister, said the government has promised to take up the matter with the Centre.

Other Demands in the Representation Submitted by KTM Society

  • Allow input tax credit to tour operators or eliminate multi-stage taxation on tour operators
  • Include domestic tourism in ‘Make In India’ scheme
  • Portion of tax refund to FTO/clients to attract more foreign exchange
  • Exempt homestays with revenue up to Rs. 50 lakh from GST