The impact of GST on your next holiday

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After months of speculations and criticism of the new tax regime, GST has finally rolled out and brought Indian citizens under one tax. With an aim to increase transparency and to follow ‘One Nation, One Tax’, GST has been carefully planned and rolled out. GST will have an impact on your next holiday. Under the GST, the facilities you avail will have an impact on the amount of tax you will have to pay. With proper planning, you may be able to save on taxes and make your vacation cheaper. For those who love luxury and plan to make their holidays extravagant, the travel and stay would cost more.

For your air fare, the new rate of tax will go down to 5% as compared to the 6% earlier. Air travel has been placed in the smallest of the four tax brackets, since airlines will not be able to take advantage of the input tax credit because jet fuel is not a part of GST. Hence, the cost of economy class tickets is likely to remain the same. However, there could be a slight increase in flight fares for business class passenger since airfare for this class has been placed in the 12% bracket as compared to 9% earlier. A comparison is given below:

Under old tax regime:

Economy Class 5.6%

Business Class 8.4%

Under GST:

Economy Class 5%

Business Class 12%

For your rail travel, the Government has charged no tax on the sleeper class, second class and metro tickets. The first class and AC tickets would attract a tax of 5%. Further, the catering charges for food served in trains have also been modified. The rise in tax from 4.5% to 5% under GST will increase the price of railway tickets marginally. Passengers who are traveling for business purposes can claim an input tax credit on rail ticket prices which would help reduce their expenses.

After transportation, comes the stay. There are different rates for hotels and resorts across the Country. The hotels have been divided based on the service they provide and the amount charged for the same. For hotels charging less than Rs.1000 per day, there is no tax applicable on them. For hotels with a tariff from Rs.1000 to Rs.2500 per day, a tax rate of 12% would be applicable and a rate of 18% GST will be charged on hotels charging a tariff in the range of Rs.2500 to Rs.5000. Prior to GST, there was a rate of 21%-22% levied on most hotels. However, the hoteliers are not happy with the 18% tax slab since it will become expensive for travelers. A stay at 5 star resorts and luxury hotels would cost you more, with a GST of 28% imposed on it.

Under old tax regime:

Hotels below Rs 1000 per day Up to 15%

Remaining hotels Up to 22%

Under GST:

Hotels below Rs 1000 per day Nil

Rs 1000 – Rs 2,500 per day 12%

Rs 2,500 – Rs 7,500 per day 18%

5-star Hotels 28%

If you prefer to use public transport while travelling, GST will help you save on the cost of same. Earlier, the taxi services were taxed at 6% which is now reduced to 5%. Public transport facilities like buses, inland waterway systems, monorail systems and trams are out of the taxation ambit. Earlier, AC buses attracted a rate of 6% of tax which is now reduced to 5%. Online booking for such buses would cost more, since it will attract an 18% GST instead of 15% service tax.

Under old tax regime:

Cab aggregators and taxis 6%

Buses, monorails, metro, inland waterways Nil

AC Buses 6%

AC bus ticket booking 15%

Under GST:

Cab aggregators and taxis 5%

Buses, monorails, metro, inland waterways Nil

AC Buses 5%

AC bus ticket booking 18%

A holiday involves visits to amusement parks and recreational activities. This will cost you dear. You will have to pay 28% for amusement and theme park tickets. Further, recreational activities like circus shows, theatrical performances, classical dance shows would be taxable at 18%. Earlier, it was taxed between 0-15%. Cinema would attract a tax of 28% across the country.

Under old tax regime:

Amusement Park 15%

Circus, Drama, Dance shows, etc. 0-15%

Cinema 0-110%

Under GST:

Amusement Park 28%

Circus, Drama, Dance shows, etc. 18%

Cinema 28%

Lastly, restaurants form an important part of every holiday. They are broadly classified as AC and non AC restaurants. Non AC restaurants will charge a 12% GST while AC restaurants will charge 18% GST. In both the cases, the taxes go up. Earlier budget restaurants charged 6% which has doubled with the implementation of GST.

Under old tax regime:

Non AC budget restaurants 6%

AC fancy restaurants 10.6%

Under GST:

Non AC budget restaurants 12%

AC fancy restaurants 18%

Hence, for your next travel, purchase the low cost air tickets, be ready to pay a higher price for the food and save on public transportation.