From GST reductions to improved infrastructure, Goa Chamber of Commerce and Industry outlines key measures to enhance Goa’s competitive advantage in the global tourism market
The Goa Chamber of Commerce and Industry (GCCI) has urged Union Finance Minister Nirmala Sitharaman to reduce the Goods and Services Tax (GST) on all hotel bookings to 12%. This proposal aims to benefit Goa’s hospitality sector, making it more competitive against destinations like Sri Lanka and Southeast Asian countries, which have more favorable tax structures.
In its letter to the finance minister, GCCI also suggested that restaurants be given the option to choose between a 5% GST rate without input tax credit or a 12% GST rate with input tax credit. The Chamber emphasized that a unified GST rate for hotel accommodation would make travel more affordable and stimulate India’s tourism sector. Currently, the GST rate on hotel rooms is based on the room tariff: 12% for rooms priced up to `7,500 per night and 18% for those above `7,500 per night. These recommendations are part of GCCI’s pre-budget proposals for the Union Budget 2025-26.
“Rationalizing GST rates and slabs is crucial to address inverted duty structures, prevent cascading effects, and reduce classification disputes,” stated GCCI. The Chamber also highlighted the need to review ‘blocked’ credits and state taxes to ensure a seamless value chain. Additionally, GCCI’s wishlist stresses the importance of tax simplification, improving the Ease of Doing Business, and implementing measures to promote economic growth while addressing challenges, litigation, and the uncertainty created by frequent amendments, according to GCCI Director General Sanjay Amonkar.
Jack Ajit Sukhija, President, Travel and Tourism Association of Goa (TTAG), emphasises the importance of reducing GST for the growth of Goa’s tourism industry, particularly as the state faces stiff competition from destinations like Sri Lanka and Southeast Asia, which have more favourable tax structures. “Any reduction in GST is welcomed. A uniform 12% GST on room rates, regardless of tariff, would align indirect taxes with those of Southeast Asian countries, helping to reduce costs for consumers. What would truly benefit the industry is a reduction in airfares, achieved by lowering VAT on aviation turbine fuel (ATF) and cutting user development and baggage fees at airports. This would make flights more affordable for consumers,” he stated.
Prahlad Sukhtankar, Chapter Head of the National Restaurant Association of India (NRAI) Goa Chapter, discusses the challenges posed by the high GST rate on hotels and restaurants, especially without the benefit of Input Tax Credit (ITC). “The restaurant industry is a major contributor to India’s economy, not only through substantial tax revenues but also as the second-largest employment sector, directly employing over 8.5 million people. With an annual turnover of INR 5.69 lakh crores, it ranks as the third-largest sector in services, after retail and insurance. However, despite its significant contributions, the restaurant industry remains the only sector burdened with a 5% GST without the benefit of ITC. This lack of ITC negatively impacts operating margins and hampers growth, as increased project costs slow expansion plans,” Sukhtankar explained.
Saurabh Khanna, co-Chair of GCCI Tourism Committee speaks on other initiatives the GCCI is considering to help Goa’s tourism sector remain competitive while ensuring sustainable growth. “The Goa Chamber of Commerce and Industry (GCCI) has proposed several measures to enhance the tourism experience and streamline operations in the region. These include extending permissible sound levels in designated tourist areas and events until 11 PM, rather than the current 10 PM limit, to support a vibrant nightlife while maintaining harmony with local communities. GCCI also advocates for a simplified music licensing process, limiting approvals to local police stations to reduce bureaucratic delays and encourage compliance from event organizers. Furthermore, the Chamber suggests that the responsibility for guest documentation in rent-a-bike and car services should lie with vehicle owners, ensuring a smoother experience for tourists while maintaining legal compliance. To improve safety and reduce confusion, GCCI recommends installing clear, multilingual road signage across Goa, especially for first-time visitors. The development of strategically located multi-level parking facilities is also suggested to alleviate congestion in popular tourist areas. On the tax front, GCCI proposes the integration of VAT into the GST framework to eliminate discrepancies and simplify the tax structure, which would make the tourism sector more affordable and competitive. Finally, the introduction of app-based taxi services is recommended to provide tourists with more convenient, flexible, and affordable transportation options, ensuring safer travel and addressing concerns like overcharging and drunk driving.”
Sukhija further asserts that a significant boost to the industry would come from removing the `7,500 cap on room tariffs for levying GST on restaurants. “Currently, restaurants with a tariff exceeding `7,500 are subject to 18% GST with full input tax credit, while those with tariffs below `7,500 face a 5% GST without input tax credit.
A uniform GST of 12% on all rooms and restaurant services, with full input tax credit, would provide considerable relief to businesses and facilitate easier operations,” he explained.
The proposal to allow restaurants the option to choose between 5% GST without input tax credit or 12% with input tax credit could significantly benefit businesses. Sukhtankar added that the NRAI-Goa Chapter is actively pursuing these options to support local restaurants in preserving profitability. “We have approached the Finance Minister and various government departments to restore ITC for the restaurant sector. Our proposal suggests a 12% GST for those opting for ITC, while retaining the current 5% rate without ITC for those not wishing to adopt the new provisions. Restoring ITC would offer essential relief to a struggling industry, stimulate growth, and assist in reviving businesses that have been forced to close. Most importantly, it will generate new employment opportunities, encourage further growth and investment, and significantly contribute to the broader economy.”
The recommendation to simplify income tax provisions and extend tax benefits, such as raising the basic income tax exemption limit and eliminating cesses is significant. Khanna speaks on how these tax measures can benefit the tourism industry in Goa, particularly in terms of attracting more investments and encouraging entrepreneurship. “Extending tax benefits, such as increasing the basic exemption limit, would leave individuals with more disposable income, leading to higher consumer spending in Goa’s tourism sector, including hotels, restaurants, local experiences, and retail. This boost in spending would positively impact the overall economy. Additionally, streamlining tax-related procedures, such as TDS deductions and the filing of returns, would reduce administrative burdens on tourism businesses. Currently, the lengthy processes involved in resolving issues like short deductions or PAN errors create unnecessary hurdles, but simplification would save time and resources, allowing businesses to focus on growth. Furthermore, a simplified tax structure and reduced compliance requirements would foster an environment conducive to entrepreneurship, encouraging new entrants into the tourism industry with innovative services that can attract more visitors to Goa. Lastly, the elimination of cesses and rationalization of taxes would create a more investor-friendly climate, making Goa’s tourism sector more appealing to potential investors who seek straightforward, profitable tax policies.”
The proposals put forth by Goa Chamber of Commerce and Industry (GCCI) represents a critical step toward strengthening Goa’s tourism sector and ensuring its competitiveness on the global stage. The reduction of GST on hotel bookings to a uniform 12%, coupled with a more streamlined approach to tax procedures, could significantly ease the financial burden on both tourists and businesses. This move would create a more level playing field with competing destinations, particularly in Southeast Asia and Sri Lanka, where the tax structures are more favorable. By eliminating the discrepancies in GST rates for hotel rooms and restaurants and offering flexibility to choose between different GST options, the GCCI seeks to boost the profitability and growth of Goa’s hospitality and restaurant sectors, which are key drivers of the state’s economy.
Moreover, the introduction of simplified tax structures and improved ease of doing business would pave the way for new entrepreneurs to enter the tourism market, bringing innovative services and experiences that could attract even more visitors to the state. The suggestions to extend permissible sound levels, simplify music licensing, and improve road signage all aim to enhance the overall tourist experience, while addressing the logistical challenges that visitors often face. Likewise, the development of multi-level parking facilities and the introduction of app-based taxi services would improve accessibility and convenience, further supporting the state’s tourism appeal.
Ultimately, these measures would not only make Goa a more attractive destination but also encourage sustainable growth, greater investments, and the creation of new jobs. By addressing the challenges facing Goa’s tourism sector, Goa Chamber’s proposals have laid a solid foundation for the continued success of the industry, ensuring that it remains resilient and capable of adapting to the evolving demands of both local and international travelers.
