Since the mining in Goa took a hit, the biggest revenue generation for the State comes from tourism, especially MICE Tourism (Meetings, Incentives, Conferences and Exhibitions). With its pristine beaches and buzzing culture everyone wants to retreat to Goa for a fun-filled corporate meet. However, the scenario has drastically changed since the implementation of Goods and Services Tax (GST) on July 1 this year.
The conference market in the country is valued at about $4.8 billion and is growing at a fast pace. Goa is amongst the top five destinations for MICE in the country. About 65-70 per cent of the total revenue generation done by hotels is contributed by MICE. The State has some excellent hotels to cater to this and has been involved in MICE tourism and wedding tourism for number of years. Goa is also rated very high for corporate initiatives in India.
Owing to this growing demand, the Goa government is also planning to build a convention center which will be able to accommodate 5,000 guests under one roof. This will help us host big gatherings and conventions.
What ails MICE tourism is the 28% tax on rooms which have a tariff of Rs 7500 and above per night. Hotel tariffs are always dynamic and subject to the demand during the season it varies. However, the GST remains static and 28% tax will be charged if the hotel has been registered earlier as ‘luxury hotel’. The woes are accentuated when the corporates learnt that they would not get the input credit on that 28% payed as GST. This is only for those companies which are based outside the state where MICE tourism is taking place.
All these points have been raised before the Goa Tourism Development Corporation and Goa Tourism and the government has taken this issue seriously and have represented their concern before the GST Council at the center.
“Rationalisation of the 28 per cent GST is required for proper business growth and allowing input credits to companies which are engaged in MICE tourism would be a welcome change. Representations have been made before the GST Council and we are eagerly waiting for their review meeting,” said Anand Chatterjee, general manager, Hotel Planet Bollywood.
According to the provision of service rules during the service tax regime, India was considered as a one country but with the GST coming in every state, they are now fragmented and federal system took over in a true sense. “After the GST, each state in India guards its own territory as far as the tax collection is concerned. Since the service is provided by the hotel only, it becomes an issue of local billing and hence the input credit to the companies based out of Goa cannot be provided. One state credit is not available to the other state under the GST regime,” said Sandip Bhandare, noted chartered accountant in Goa.
To compound the misery the central share which is 14 per cent of the total 28 per cent is also not made available to the companies which have engaged in MICE tourism. The 14 per cent central share which one is paying in Goa may not be available as credit to any company which is based out of Goa. It is not only the state share which one is not able to offset against some other state share but also the Center share.
Giving solution to this issue, Mr Bhandare added that, “How to distribute the revenue between the center and the state is the issue of software which can be worked out by GSTN at the backend. At the frontend when the customer pays, he should be in a position to get credit if he has spent in India as the GST major motto was one nation, one tax. No customer should be denied credit under the GST regime.”
Director of Lucros, a company engaged in event management, Shyam Haridas is of the opinion that MICE event are gradually falling in numbers as input credit is not provided to the companies which visit Goa for their conferences, meeting etc. “I can only say about our business of event management and not about the hotel industry and I can say that our business has plummeted by 25 per cent,” said Mr Haridas.
