The Goods and Services Tax (GST) Council, in its 24th meeting on January 18, is likely to make changes in the GST Law to facilitate the release of locked input tax credit in tourism and hotel industry. The council is meeting to hold discussions over Narendra Modi’s mission for having a digital-based economy, with a focus on incentivisation of digital payment of taxes under the GST regime.
The industry bodies have been mentioning that the lack of input tax credit (ITC) under the GST has impacted the Meetings, Incentives, Conferences and Exhibitions (MICE) segment with cancellations and postponement of events. “If a company sends an employee outstation, then the credit flow on expenses paid such as stay in hotel, travel cannot be claimed as per current provisions. Council is likely to correct this to ensure effective credit flow,” said a senior government official.
Though the tax rate has been reduced to 5 per cent, thus benefiting the customer, the removal of input credit is a burden on the hotels, which has to bear the 18 per cent input cost, which is leading the hotels not to pass the benefit of tax reduction to the end user.
