All travelers, before planning a trip must have prepared an estimated budget before leaving home. Prices of food, water, transportation and basic necessities in other cities can be much higher than you'd expect, and can rapidly incur huge cost on your travel budget. So, know the GST impact if you are planning a trip post-GST, you need to change your estimated plan before stepping out from home to travel.
What is GST?
The Goods and Services Tax (GST) is India's biggest tax reform in 70 years of independence and was introduced by The Prime Minister of India Narendra Modi. GST has replaced multiple taxes levied by state and central government with a single indirect tax for all. GST is taxed at the following rates, 0%, 5%, 12%, 18%, 28%
Exempted categories – 0%
Commonly used Goods and Services – 5%
Standard Goods and Services fall under 1st slab – 12%
Standard Goods and Services fall under 2nd Slab – 18%
Special category of Goods and Services including luxury - 28%
Talking about travel expenses, being a traveler I have estimated expenses that are always worth estimating before setting off on a vacation. The major expenses incur are as follows:
Transportation is a concern of every traveler, whether you are planning how to reach a destination or trying to hire a taxi. Know GST impact on various components of travel:
Talking about AIR TRAVEL post-GST, Economy-class air travel will be less expensive with the GST rate settled at 5% against the present 6%. In any case, business class tickets will be costlier with a 12% assessment against the present 9%. The new tax regime will likewise make non-stop flights to key universal goals more costly than stopover flights as GST is to be charged on the principal leg of the flight. Also, from July 1, sudden plans will become difficult due to limited availability of seats. Those who want to travel affordably by air will have to book their tickets well in advance.
Talking about TRAIN TRAVEL post-GST, AC and first-class train travel will become a little expensive because service tax is set to increase from 4.5 per cent to 5 per cent. However, non-AC travel, including local trains, metro, and religious travel will remain exempt from tax.
Talking about CAB RIDES post-GST, hailing an Ola or Uber cab will become cheaper from July 1, as the incidence of tax will come down a bit to 5% from 6% for booking made on cab aggregators like Ola, Uber, Meru Cab and Mega Cab. Renting of vehicles from car rental services like Zoom Car and Myles will also attract 5 per cent service tax.
2. Hotels & Restaurants
Budget hotels post-GST will attract low or even nil in the case of those charging less than Rs 1,000 a day for rooms. While those with a room rate of between Rs 1,000-Rs 2,500 will be taxed at 12 percent and those with a tariff of Rs 2,500-Rs 5,000 will attract 18 per cent tax. Hotels those charging Rs 5,000 and more room tariff per day will have to pay 28 per cent. Restaurants in such hotels, too, will have to pay 28 per cent GST.
Ritesh Agarwal, the founder of budget hotel aggregator OYO Rooms, said lower tax rate for budget hotels “will ensure that the industry's quality upgrade continues while delivering standardized accommodation to millions of middle-class travelers”.
“This will also save and create thousands of new jobs, which could have been impacted by higher tax rates,” he said.
Under GST, entertainment expense will be converged with benefit impose and a composite 28% levy will be charged on silver screen administrations and on betting and gambling at race courses. While the rate proposed for silver screen corridors is lower than the current 40% to 55%, it may not bring about a diminishment in ticket costs as States keep on holding the privilege to demand local charges on them.
Thus, you can see that the new tax reform Goods and Services Tax (GST) will definitely make your travel cheaper but if you are a luxury traveler it can cost you a fortune.