To reduce the tax incidence in the tour and hospitality sector, the Goods and Service Tax (GST) Council has tasked its Fitment Committee to work out an optional scheme for levying tax on the margins made by tour operators at a suitable rate.
Currently, a 5% GST is levied on gross tour costs without the facility of the input tax credit. “The Council at its meeting in Chandigarh on June 28-29 has given in-principle approval for formulating a margin scheme for tour operators. The Committee’s recommendation will likely be taken by the Council in its meeting after the August meeting,” an official told FE.
The fitment committee will work out the details of the scheme in consultation with stakeholders. Given the adverse impact on the tourism sector due to the pandemic, the fitment panel had suggested a ‘margin scheme’ option for tour operators under which GST has to be paid on value arrived at on a deemed value basis as a certain percentage of the gross tour cost representing fair competitive margin.
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