Indian companies shun out-of-state conferences as new GST bites

Indian companies are cancelling domestic conferences if the booking has been made at venues outside the state where they are registered. This follows a new tax regime Goods & Sales Tax (GST) that allows tax off-sets for business events, only if conducted within the home state of the host company.

The Input Tax Credit (ITC) comes with India’s newly introduced GST. For hotels, the tax ranges from 12 per cent for room rates of Rs. 1,000 -2,499 (US$15.65 to US$39.05) to 28 per cent for room rates of more than Rs. 7,500.

Dilip Datwani, president of the Hotel and Restaurant Association of Western India, said: “Advance event bookings are being cancelled and new ones are not happening. Many companies are considering holding their events in the home state where they are registered for GST.”

While companies have accepted the high GST, the new tax structure becomes unviable without the ITC. Lords Hotels & Resorts say they have been hit by an eight per cent loss of conference bookings since July. Pradeep Jain, associate vice president finance of Lords Hotels & Resorts confirmed that the industry is apprehensive of losing business to other countries in south and south-east Asia.

“Many of our neighbouring countries not only tax less than half of what is required for hospitality services in India, but also a few of them provide tax refunds,” said Jain.