Come July, India will witness a new and unified system of tax structure in the form of Goods and Services Tax (GST). Like any other industry, hotel industry too is preparing itself to operate as per this new taxation regime. And as a leading Hotel PMS Software we at IDS Next have also been working relentlessly to help hotels in their pursuit to become GST compliant.
Trouble with the existing taxation system
Presently the hotel industry is affected by multiple tax structures like service tax, luxury tax and VAT, levied by both central government and respective state government. For example, VAT varies from state to state and luxury tax depends on the proportion of the room tariff. Service tax depends on the types of services provided by the hotel. This leads to confusion as sometimes the same service or product gets taxed under multiple heads and multiple times. This leads to higher taxation which goes up to 27%. Additionally, some of the input tax from central and state taxes can’t be set-off against other taxes. In other words, this leads to a cascading effect.
How GST will help hotels in this?
Introduction of GST is expected to lower the costs for consumers due to tax set-off possibilities. It will also facilitate seamless movement of products and services across the country. With GST in place, the current multiple tax regimes will cease to exist. Thus, it would reduce the compliance costs and issues related to inspections, audits, and assessments. In fact, it would help hoteliers do business with ease.
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Implementation of GST makes it mandatory for hotels to adopt GST ready Hotel PMS Software. This would help hotels to capture