Srinagar: A parliamentary panel has noted that the Goods and Services Tax has had a “negative” effect on tourism in Jammu and Kashmir.
Committee on Development of Tourism in Jammu and Kashmir, in its report has also said that the Government of India should reconsider the indirect tax regime on tourism-related activities in the state.
It said unlike other states, residents of Jammu and Kashmir and its business owners spend huge amounts of money on procuring essentials, most of which have to be flown in, which increases their capital expenditure.
“The sensitive nature of Jammu and Kashmir must be taken into consideration during the development of tourism in the region. The implementation of GST on tourism in the region will have manifold effects, mostly negative on its economy,” the committee said.
It said small business owners of small-scale hotels, bed and breakfasts and home stays cannot list their properties on various travel intermediary websites as there is a levy of 18 per cent of GST, which cuts across the little profit they make, making their venture “unsustainable”.
“In this regard, the Committee recommends that the implementation of Goods and Services Tax (GST) on tourism-related activities in the state must be reconsidered. It must be done in a cautious and phased manner in order to ensure that the delicate state of tourism in the region is not adversely affected,” the panel said, adding the Ministry of Tourism must initiate dialogue with the Finance Ministry in this regard.
The Committee also expressed worry over the “negative publicity” which it cited as a major hindrance to increasing footfall in the region.
Earlier, Finance Minister of India Arun Jaitley said that country is moving towards a single standard rate instead of the current 12 per cent and 18 per cent tax slab in GST.
In a Facebook post titled ‘Eighteen Months of GST’, Jaitley said 28 per cent tax slab would soon phase out except for luxury or sin goods and that the standard rate could be a mid-point between 12 and 18 per cent. Adding that the standard single rate would take some time to implement, Jaitley wrote, “The country should eventually have a GST which will have only slabs of zero, 5% and standard rate with luxury and sin goods as an exception.”