The road ahead

The Goods and Services Tax (GST) is now a reality but not many are still clear about the implications. All sectors have adopted a ‘wait and watch’ policy before voicing their opinion about the biggest tax reform in independent India.

However, the travellers are a happy lot since all roads seeming to be leading to a common destination — a travel plan that is much more pocket-friendly and hassle-free.

“Travelling by air is set to become more affordable under the new regime as the GST on economy class seats is set at 5% as compared to the previous 6%,” says Eldho Chirackachalil, an MNC professional. “So frequent fliers and budget travellers both have a reason to cheer. This move will give a boost to domestic air travel and many holidayers, especially families, will be open to travelling to places they previously considered too far.”

“Travelling in business class in airlines will become more expensive but that wouldn’t be a big problem for those who can afford luxury travel in the first place,” he adds.

A similar model has also been followed in the pricing of train tickets but travellers say that the change will be marginal. “Passengers will have to pay a little more to travel AC and first class in railways but that shouldn’t be too much of a problem,” says Amalraj V, a budding director who often takes off on impromptu trips. “And since the prices of non-AC tickets have come down, budget travellers have no cause to worry.”

Other hassles that holidayers usually faced was that of finding affordable accommodation and the new tax structure has been generous there too. “The composite rate earlier available for room services at hotel is now removed and only GST will be charged now,” says Lini John. “Budget hotel rooms will become cheaper and that is good news for travellers, especially people who travel in large groups or with families. It is a welcome move and I am looking forward to seeing how much my hotel costs come down during the next trip.”

Aida Joshy, senior financial analyst at Ernst and Young and a frequent traveller, points out another aspect that may impact those bitten by the travel bug. “The tax on bank services has gone up. This would result in customers facing high bank charges. Usually a traveller would carry minimum liquid cash and mostly resort to payments by card and traveller’s cheques. These would now become costlier due to higher GST.”

On a positive note, she also talks about the benefits of having a uniform price structure across states that will help tourists from being fleeced by shopkeepers. “Customers need not worry about the exorbitant prices that shopkeepers had earlier reserved for the visitors, both domestic and international. The entire GST collected has to go to the government and so the sellers have no incentive to push the base price as it will attract higher tax tariffs.”

If you are one of those who needed an excuse to travel more, we just gave you quite a few. Time to pack your bags yet?