Saturday, 21 September 2019

GST rate cut on room tariffs; Double bonanza

*Hotels: GST rate cut on room tariffs; Double bonanza (Corp + GST cut)*

• FM today provided bonanza to corporates with reduction in tax rate from 34.3% to 25.2%.
• *GST council has provided another booster shot.* 
• *GST rates on room tariffs has been reduced as under*
*ADR upto*
Rs 1,000 – nil
Rs 1,000-Rs 7500 – from 18% to 12% and
Rs 7,500+ - from 28% to 18%
• *This should help Hoteliers to stimulate demand and consequently raise tariffs.* 
• Tax rates on hotels especially in the luxury segment had been one of the highest in India. 
• Government focus to boost domestic and inbound tourism (large gross foreign exchange earner of ~Rs 2tn) is constructive. 
• *GST cut as positive for all the branded hotel companies viz. IHCL, Lemon Tree, EIH and Chalet.*
• *After three consecutive years of healthy demand (likely minor blip in FY20 due to slowdown till now), it would be surprising if Hotel cos fail to capitalize on ARR growth.*

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