Kerala Urges Centre to Bring Changes in GST to Boost Tourism

Tourism Minister Kadakampally Surendran

Kochi: Kadakampally Surendran, Tourism Minister, Kerala has submitted a note to Union Minister of State for Tourism Alphons Kannanthanam seeking some key changes in the Goods and Services Tax (GST) as it applies to the tourism sector.

Kerala wants facilitating levying of Integrated Goods and Services Tax (IGST) by hotels and resorts so that tour operators could claim Input Tax Credit (ITC). The State sought a presumptive tax rate of 1.8 per cent on small tour companies to overcome the post-GST difficulties. Kerala has also demanded allowing ITC for tour operators at the GST rate of 5 per cent. The State Government has pointed out that hotels and resorts were not at present being allowed to levy IGST, which prevented inter-State tour operators from availing ITC on these costs.

“This is contrary to the ‘One Nation, One Market’ philosophy. Such cascading of tax on tax would place a burden of up to 38 per cent tax on domestic travellers,” says the note. The 1.8 per cent presumptive tax on gross billing would translate to an effective 18 per cent tax on profits (typical margins being about 10 per cent). Precedence has been set for air ticketing services (which allows agents a presumptive tax of 0.9 per cent on domestic and 1.8 per cent on international tickets.)

Kerala has further sought a change in the definition of ‘tour operator’ to include all nine support services defined in notification 11/2007-Central tax (rate) under ‘tour operation company/travel agency.’ Tour operators are expected to sell packages and apply a 5 per cent GST. But, ITC is not allowed on this rate, which results in cascading of tax. The State has also sought scrapping of automatic extension of room rent tax rate on ancillary services as this would increase tax burden and push up the prices.

Malanad-Malabar Cruise Tourism Project

The Malanad-Malabar cruise tourism project connecting the water bodies between the Mayyazhi river in Kannur and the Chandragiri river in Kasaragod under the Swadesh Darshan scheme will get Central assistance, Kannanthanam has said.

At a review of Centrally-funded projects with Kadakampally Surendran and other officials, the Union Minister said the Centre was ready to give immediate assistance for the Rs. 300-crore project. He also suggested including the Athirappilly-Malayattoor-Kodanad tourism circuit either as a spiritual tourism circuit or as an ecotourism circuit to get funding under the Swadesh Darshan scheme. On the Sree Narayana Guru spiritual tourism circuit, Kannanthanam asked the State to come up with a detailed project report. The Minister was briefed about the Sabarimala- Erumeli- Pampa- Sannidhanam spiritual circuit, Sree Padmanabhaswamy- Aranmula- Sabarimala spiritual circuit, and the 150-km Gavi-Vagamon mega tourism circuit. V Venu, Principal Secretary, Tourism; Jaffer Malik, Additional Director; Reghudas, Additional Director; and V Ratheeshan, Chief Executive Officer, Sree Padmanabhaswamy Temple were present.