GST affects the MICE segment

Post the Goods & Services Tax (GST) roll out from 1 July, the Meetings, Incentives, Conferences and Exhibitions (MICE) related activities have been hit hard. One of the anomalies that emerged post GST roll out was that MICE activities and other events held in hotels outside of home state are not eligible for Input Tax Credit (ITC).

This has been leading to cancellations and postponements for pre booked events. Given the emergence of MICE Tourism as one of the fastest growing segments, and its potential to disrupt growth, the Hotel and Restaurant Association of Western India (HRAWI) has appealed to the Government to revisit this particular aspect of the GST.

 “There is an overall reduction in MICE bookings across hotels in India as compared to the same period last year. Advance bookings are being cancelled and new bookings are not happening. Wedding season, one of the top grossing times for hotel banquet division, is expected to be flat this year. Most companies are considering holding events in the same State where they are registered under GST. Businesses may still have digested the high GST, but without ITC, it just becomes unviable. MICE tourism is too important a segment for the nation to overlook,” says Dilip Datwani, President, HRAWI.

The 28 per cent GST rate for rooms with tariff of Rs. 7500 and above is one of the highest in the world and will seriously affect cash flow, he pointed out.The disruption following the GST rollout comes close on the heel of liquor ban on highways. With revenues already hit, this comes as a double whammy. Many hotels will find it difficult to sustain business and may close down or may have to scale down operations which are expected to result in job losses and de-growth.
"Loosing potential business because of this ITC anomaly will translate into big losses for us. We feel that the Government may have overlooked this aspect while charting out the GST for hospitality. We hope that it is reconsidered and a provision be made so that all affected stakeholders continue to carry on conducting business as usual,” says Rishi Puri, Vice President, Lords Hotels & Resorts.

"The non-refund or non-receipt of ITC for businesses holding MICE in states other than the ones they operate in is the biggest drawback of GST for hospitality. ITC is available if the entity arranging the MICE has their GST registered in the State where it’s held and also unfortunately ITC on Integrated Goods & Services Tax (IGST) is not applicable for the hotel industry,” says Kamlesh Barot, past President, HRAWI & Federation of Hotel and Restaurant Associations of India (FHRAI).