Project report impact of GST on Hotel Industry

A
Project Report on
IMPACT OF GST ON HOTEL INDUSTRY
Submitted in Partial Fulfillment for the Degree of
Bachelor of Business Administration
S.S. Jain Subodh PG (Autonomous) College
2019-20
SUBMITTED BY : SUBMITTED TO :
Dheeraj Agarwal Dr. Devendra Kumar Sharma
1841042 Assistant Professor
BBA V SEM.

CERTIFICATE
This is to certify that this project report entitled Impact of GST on Hotel
Industry is a record of project work done independently by Mr. Dheeraj
Agarwal under my supervision and that he has not previously formed the
basis for the award of any degree, fellowship or associate ship.
DR. DEVENDRA KUMAR SHARMA
S.S. JAIN SUBODH P.G. (AUTONOMOUS)
COLLEGE, JAIPUR

DECLARATION
I hereby declare that this project report entitled Impact of GST on Hotel
Industry is a bonafide record of work done by me during the course of
summer project work and that it has not previously formed the basis for the
award to me for any degree/diploma, associate ship, fellowship or other
similar title of any institute/society.
DHEERAJ AGARWAL
S.S. JAIN SUBODH P.G. (AUTONOMOUS)
COLLEGE, JAIPUR

ACKNOWLEDGEMENT
It is not often in life that you get a chance of appreciating and expressing
your feelings in black and white to thank the people who have been a
crucial part of your successes, your accomplishments, and your being what
you are today. I take this opportunity to first of all thank the Faculty at S.S.
Jain Subodh P.G.(Autonomous) College, especially Dr. K.B.Sharma,
Principal, and Dr. Rita Jain for inculcating and instilling in me the
knowledge, learning, will-power, values and the competitiveness and
professionalism required by me as a management student.
I would like to give special thanks to Dr. Devendra Kumar Sharma for
educating me silver lining in every dark cloud. His enduring efforts,
guidance, patience and enthusiasm have given a sense of direction and
purposefulness to this project and ultimately made it a success.
I express my sincere and heartiest thanks to everyone who has contributed
towardsthe successfulcompletionof the Project,undertakenby me at HotelArya
Niwas.
Last but not the least; I would like to thank my family: my parents, for
supporting me spiritually throughout my life.
The errors and inconsistencies remain my own.
DHEERAJ AGARWAL

CONTENTS PAGE NO.
CHAPTER 1: INTRODUCTION…………………….…..….….….1-48
1.1 Hotel industry & its classification………………………………………...……02
1.2 Types of department in Hotel…………………………..….…………………...11
1.3 Facilities & challenges faced by hotel ..………………….…….………..….....16
1.4 GST introduction & its components………….…………………...…...............27
1.5 Different rates of GST on hotel sector………………………………………….30
1.6 Need of GST in India…………………………………………………………...36
1.7 Impact of GST on Hotel Industry pros & cons………………………………...37
1.8 Financial Impact of GST on hospitality sector………………………………...43
CHAPTER 2: COMPANY PROFILE……………………….…....49-58
2.1 History of Hotel Arya Niwas...…………….………….……….…....,,,,,,,.....…50
2.2 Subsidiaries of Hotel Arya Niwas……………….……….…………...…,,,,,,,,,51
2.3 Values, objectives, facilities, services………….….................................,,,,,,,,,.53
2.4 Different types of room & their charges………….………….……............,,,,,,,56
2.5 Chitra Cafeteria – Restaurant of Arya Niwas…….………….…………....,,,,,,,57
CHAPTER 3: RESEARCH METHODOLOGY........................…59-61
3.1 Title of the Project…………………………………...………...……..,,,,,,,.......60
3.2 Objective of Study……………………………………...….…...…………,,,,,,,60
3.3 Research Design………………………………………...………...……....,,,,,,,60
3.4 Collection of Data………………………………………..…...………….,,,,,,,,61
3.5 Limitations of the Study………………………………..………………..,,,,,,,,,61

CHAPTER 4: ANALYSIS & INTERPRETATION…….…….….62-73
4.1 GST vs Service tax rates…………………………………………….............…63
4.2 Pre & Post GST rates……………………………………………………..........65
4.3 GST impact on Hotel Room after union budget, 2019…………………….......68
4.4 Impact on Cafeteria on Hotel Arya Niwas……………………………...……..70
4.5 Effect on restaurant owner and customers…………………………….……….72
CHAPTER 5: SUMMARY OF FINDINGS……..…….…….….74-
5.1 Overview of report……………………………………………………..…....…75
5.2 Findings of study……………………………………………………….……...76
5.3 Final conclusion …………………....…………………………………...……..77
5.4 Suggestion of study …………………………………………………………....78
APPENDIX
BIBLIOGRAPHY
Referred Books……………………………………………..............................…79
References………………………………………………………………….........79
Websites…………………………………………………………………………80

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CHAPTER 1
INTRODUCTION
OF TOPIC

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TOPIC: IMPACT OF GST ON HOTEL INDUSTRY
1.1 INTRODUCTION TO THE HOTEL INDUSTRY
Hospitality is about serving the guest o provide them with “feel good effect”.
“Athithi devo bhavha (Guest is God) is one of the central tenants of Indian
culture since times immemorial.
Today Hospitality sector is fastest growing sector. Nowadays the travel and
tourism also included in hospitality sector lead to further development of
hospitality sector.
Hospitality is all about offering warmth to someone who looks for help at a strange or
unfriendly place. It refers to the process of receiving and entertaining a guest with
goodwill. Hospitality in the commercial context refers to the activity of hotels,
restaurants, catering, inn, resorts or clubs who make a vocation of treating tourists.
Helped With unique efforts by government and all other stakeholders, including hotel
owners, resort managers, tour and travel operators and employees who work in the
sector, Indian hospitality industry has gained a level of acceptance world over. It has
yet to go miles for recognition as a world leader of hospitality. Many take Indian
hospitality service not for its quality of service but India being a cheap destination for
leisure and tourism.
WHAT IS A HOTEL???
A hotel is an establishment that provides paid lodging on a short-term basis.
Provides basic accommodation, with modern facilities like a small home.
Provides customer satisfaction, comfortability and friendliness.
CLASSIFICATION OF HOTEL
Hotel can be classified into different categories or classes, based on their
operational criteria. For example, the type of accommodation they provide,
location of the property, type of services provided, facilities given and the
clientele they cater to can help categories hotels today.
Hotels today are basically classified into the following categories:

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1. MARKET SEGMENT -
• Economy/limited services hotel
• Mid-market hotel
• All suite hotels
• Time-share hotels
• Condotel / Condominium
• Executive hotels
• Luxury / Deluxe hotels
MARKET SEGMENT
Economy hotel:
It provides efficient sanity private rooms with bath. The furnishing and decor are
acceptable to majority of travelers. Food and beverage service may or may not be
available.
CLASIFICATION
OF HOTELS
BASED ON
MARKET
SEGMENT
FACILITIES
OFFERED
PRICING
PLANS
BASIS OF
OWNERSHIP
LEVEL OF
SERVICES
BASED ON
SIZE
BASED ON
PROPERTY

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Mid-market hotels:
They offer comfortable accommodation with private on premises bath. Food
and beverage services and uniformed bell staff. They offer above average luxury.
All Suite hotels:
It offers separate sleeping and living areas along with a kitchenette and a stocked bar,
and offer class service.
First class hotels:
They are luxury hotels with exceptional decor better than average food and beverage
service, uniformed bell services. They often have 2 or 3 dining rooms, swimming pool,
spas etc.
Deluxe hotels:
They are better and offer more specialized services than first class hotels. They also
provide limousine services
2. PROPERTY TYPE:
Small hotels: with 100 rooms or less
Medium size hotels: with 100-300 rooms
Large hotels: more than 300 rooms
Mega Hotels: more than 1000 rooms
Chain hotels: hotel in many numbers of locations in India and international
- Traditional hotel
- Motels
- Commercial hotel
- Chain hotel
- Casino hotel
- Boutique hotels
- Resorts

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Traditional hotels:
They have the basic concept of rooms with breakfast, bell desk services and the other
usual services.
Motels:
They are located on highways. Guest is given parking right outside their
rooms. The usually have a gas station / workshop attached to them.
Resorts:
They are usually situated in tourist locations like on rivers, mountains, jungles, or the
sea. They give more privilege to sports activities leisure and re-creation activities like
manages, sightseeing, adventure sports, etc.
Resident hotels:
Where guest stay for longer duration, stay like weeks, months even years.
Casino hotels
They are hotels usually in tourist spots and mainly cater to people who are on holidays.
Casino hotels like the name suggest offer gambling facilities along with
accommodations.
3. ACCORDING TO SIZE -
• Small hotels [150 rooms]
• Medium hotels [up to 299rooms]
• Large hotels [up to 600rooms]
• Extra-large hotels – above 600 rooms
4. LEVEL OF SERVICES:
World-class services:
They target top business executives and provide service s that cater to needs of such
people like lap tops in the rooms, business centre, sectarian services.

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Mid-range services:
They appeal to the larger segment of traveling public [tourist]. The services
provided by the hotel are moderate and sufficient to budgeted travelers.
Economy / Limited services hotel:
They provide comfortable and inexpensive rooms and meet the basic requirement of
the guest. These hotels may be large of small in size depending on the kind of business
they get. The key factor behind the survival of these hotels is that they are priced very
low and are in the budget of most of the travelers.
5. OWNERSHIP AND AFFILIATION:
Independent hotels:
They have no application with other properties. They have their own management and
are single properties with one owner.
Chain hotels:
They impose certain minimum standards, levels of service, policies and procedures to
be followed by their entire establishment. Chain hotels usually have corporate offices
that monitor all their properties and one management runs these properties. That is all
the hotels under the chain are completely owned and run by the chain itself.
Franchisee hotels:
The franchisee grants the entities, the right to conduct business provided they follow
the established pattern of the franchisee, maintains their standards, levels of service,
practice their policies and procedures.
6. PRICING PLANS:
European Plan: room charges only
American Plan: room + all meals
Modified American Plan: room + breakfast + lunch or dinner

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Continental Plan: room + Continental breakfast
Bed and Breakfast: room + English breakfast
7. FACILITIES OFFERED:
• Star rating
• Dulex hotels
• Sports hostels
• Budget hotels
• Bed & breakfast
AWARDING OF CLASS:
Awarding of class is done by the HRACC in India. These are a few things listed down
that are taken into consideration while awarding star category to any hotels.
Number and types of rooms the hotel has a vital role in this. The factors which effects
this are as follows.
• Elegant and comfortable surroundings
• Rooms efficiency
• Cleanness and sanitation
• Staff size and specialization
• Range and level of services
• Number of Restaurants
• Bars and Beverage services
• Concierge services
• Accessibility to entertainment
• Availability of transportation
• Spa and swimming pool facility
• Reservation and referral services.

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STAR CLASSIFICATION
Star category of hotels [India]
One star [*]
Two star [**]
Three star [***]
Four star [****]
Five star [*****]
Five star deluxe [***** deluxe]
✓ ONE STAR
Typically, smaller hotels managed by the proprietor. The hotel is often having a more
personal atmosphere. It is usually located near affordable attractions, major
intersections and convenient to public transportation. Furnishings and facilities are
clean but basic. Most will not a restaurant on site but are usually within walking
distance to some good low-priced dining.
• The hotel should have at least 10 lettable bed rooms of which at least 25% should
have attached bathrooms with a bathroom for every four of the remaining rooms.
• At least 25% of the bathrooms should have the western style WCs.
• Receptions counter with a telephone and a telephone for the use of guests and
visitors.
Example: Hotel Ajanta, Bangalore
✓ TWO STAR
Usually denotes independent and name brand hotel chains with a reputation for offering
consistent quality amenities. The hotel is usually small to medium sized and
conveniently located to moderately priced attractions. The facilities typically include
telephones and TVs in the bed room some hotels offer limited restaurant service.
Somehow room service and bell service are not usually provided.

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• The hotel should have at least 10 lettable bed rooms of which at least 75% should
have attached bathrooms and showers with a bathroom for every four of the
remaining rooms.
• 25% of the rooms should have AC.
• Telephone on each floor if the rooms do not have a telephone each.
• Supervisory staff must understand English.
• Laundry and dry cleaning services.
Example: woodlands Hotel, Bangalore, Kamath Yatrinivas, Bangalore
✓ THREE STAR
Typically these hotels offer spacious accommodations that include well appointed
rooms, decorated lobbies. Bell desk services are generally not available. They are often
located near major express ways or business areas, convenient to shopping and
moderate to high priced attractions. The hotels usually feature medium sized restaurants
they typically offer breakfast through dinner. Room service availability may vary. Valet
parking, fitness centers, pools are often provided.
• The hotel should have at least 20 lettable bed rooms of which all should have
attached bathrooms and tubs/showers.
• At least 50% of the rooms should be AC.
• Reception and information counter, book stall, travel agency, safe deposit etc.
• Telephone in each room and one for the use of visitors.
• Good quality Indian and continental food
• Senior staff must possess a good knowledge of English.
Example: Museum Inn, Bangalore, Angsana Oasis Spa & Resort, Bangalore
✓ FOUR STAR
Mostly large formal hotels with reception areas, front desk service, and bell desk
service. The hotels are usually located near shopping, dining, and other major

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attractions. The level of service is well above average. And the rooms are well lit and
well furnished. Restaurant dining is usually available and is having more than one
choice. Some properties will offer continental breakfast and /or happy hour delicacies.
Room service is usually available during most hours. Valet parking, concierge service,
fitness centers, pools are often provided.
• Hotel must have 25 lettable rooms and all with attaché bathrooms with shower
cubicle/bath tub
• Should have a recognized travel agency, book stall, safe deposit facilities, left
luggage etc.
Example: Taj Gateway, Bangalore, Hotel Janpath, New Delhi, St. Marks Hotel,
Bangalore.
✓ FIVE STAR
These are hotels that offer only the highest level of accommodations and services. The
properties offer a high degree of personal service. Although most five star hotels are
large properties, sometimes the small independent (non-chain) property offers an
elegant intimacy that can not be achieved in larger setting. The hotel locations can vary
from the exclusive location of suburban area to heart of the city. The hotel lobbies are
sumptuous, the rooms complete with stylish furnishings, and high quality linen. The
amenities often include DVD players, Jacuzzis and more. The hotels feature up to three
restaurants with exquisite menus. Room service is also available 24 hours a day. Fitness
centers, valet parking are typically available. A concierge is also available to assist you.
• Architectural features and general construction of the hotel building should be
distinctive
• Adequate parking space for cars.
• Hotel must have at least 25 lettable; rooms with modern shower chambers.
• All guest areas should be air-conditioned
• Adequate number of efficient lifts.
• 24 hours reception, cash and information counter

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Example: The Oberoi, Bangalore, The Grand Maratha Sheraton, Mumbai,Taj Bengal
and The Park, Kolkota, The Inter-Continenetal Park Royal, New Delhi, ITC hotel
Maurya Sheraton & towers, New Delhi
1.2 DEPARMENTAL CLASSIFICATION
An hotel can provide good service, when its all department work together in an efficient
and effective way by showing goog team work, coordination and communic action.
Th most important function is to provide food and shelter to prospective guest. There
number of departments or area who function round the clock 24/7.
These department can be classified into two groups:
OPERATIONAL DEPT. ADMINISTRATIVE DEPT.
(Core Department ) (Support Department)
(A) OPERATIONAL DEPARTMENT –
➢ Front office (revenue centre)
➢ Food & Beverage service (revenue centre)
➢ House Keeping (cost centre)
➢ Food production/ Kitchen (cost centre)
(B) ADMINISTRATIVE DEPARTMENT –
➢ Maintenance department
➢ Account department
➢ Human resource department

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➢ Electronic data processing department
➢ Communication department
➢ Security department
➢ Purchase department
➢ Stores department
➢ Sales and marketing department
ORGANISATION
1. The Reservations
More than half of the hotel guests make reservations. These individuals arrange the
hotel accommodations through sales representatives, travel agencies, GDS (global
distribution systems) by way of telephone calls, fax, e-mail, Internet and other
communication devices. The reservation department is responsible for receiving and
processing reservation requests for future reservations. Although procedure may differ
from hotel to hotel with regard to reservations handling, maintenance, processing and
confirmation, the purpose is still the same: to accommodate the guest request in a
manner that maximizes the hotel occupancy and room revenue.
Reservations systems can be programmed to provide reservations agents with
information on the types of rooms available (including room size, view, furnishings,
amenities and bed size) for a given day. Reservation systems provide a great deal of
information, some of which needs to be provided to the guest on request.
Reservations agents should convey the desirability, features, benefits of staying at the
hotel, rather than simply processing an accommodation request.
It is essential for the reservations agents to work closely with the sales and marketing
department when group reservations are being solicited or processed. On a day today
basis the reservation manager should review the reservation system reports and room

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availability in order to avoid over booking. Over booking can create bad feelings and
contribute to lost business in future.
Many hotels use revenue management techniques in the reservations department. This
means using information, historical and current, to enhance a hotel’s ability to carry out
a number of common business practices and there by increase both its revenues, and its
customer service abilities.
2.The Reception
The typical functions of a reception or registration department is:
• Greeting guests
• Registering guests
• Establishing a method of payment for the guest rooms-credit card, cash or direct
billing.
• Assigning guest rooms that are clean vacant.
• Assigning guest room keys to the guests.
• Informing guests about their room location and special hotel amenities, facilities,
and answering questions about the property and surrounding community.
• Calling bell desk to assist the guests with their luggage, if such service is normally
provided.
3. Concierge
Concierge may provide custom services to hotel guest. Duties include making
reservations or dining, securing tickets for theatre and sports events, arranging for
transportation, providing information on cultural events, and local attractions.
Concierges are known for their resourcefulness. Most successful concierges have
established an extensive contact of local, regional and national contacts for a variety of
services.

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4. Bell Desk
Many guests arrive at the hotel with heavy luggage or several pieces of luggage. The
major functions of the bell desk would be as follows:
• Transport guest luggage to and from guest rooms
• Familiarize guests with the hotel’s facilities and services, safety features as well
as guest room and any in room amenities.
• Provide a secure area for guests requiring a temporary luggage service.
• Deliver mail, packages, messages and special amenities to guest rooms.
• Help guest to load and unload their luggage
• Provide information on hotel services and facilities as well as group functions
5. Communications
The telephone switchboard area or department maintains a complex communications
network similar to that of any large company. The telephone department may also refer
to as private branch exchange or PBX. Hotel switchboard operators may have
responsibilities that extend beyond answering and distributing calls to the appropriate
extension. When long distance calls are routed and priced through the telephone switch,
charges must be directly posted or relayed to front office for posting to the proper guest
account. Switchboard operators may also place wake up calls, monitor automated
systems (such as door alarms, fire alarms) and coordinate emergency communications.
Operators may also protect guest’s privacy and thereby contributing to the guest
security programme by not divulging guestroom numbers.
6.The Night Auditor
The night auditor balances the daily financial transactions audit duties include checking
and completion of guest and hotel accounts, the balancing of hotel revenue figures, as
well as producing statistics and summarizes of hotel revenue for management. This task
is generally done during the night shift by the night auditor or by the night shift front
office cashier.

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7.Front Office Cashier
The cashier has full responsibility for all the cash and settlement of guest account as
well as the supervision of work of the front office cashiers. The front office cashier is
responsible for the opening, preparation and settlement of resident guest’s accounts.
They check to ensure that all charges are added to guest’s bills and that settlements are
properly processed. Front office cashier also administers the safe deposit system of the
hotel.
8.Mail and Information
A mail and information counter is normally found only in very large hotels and these
days been incorporated to reception or concierge. This department is responsible for
giving out guest’s keys and deliver guest’s mails and messages. They are also
responsible for dealing with guest’s visitors, and providing information on hotel
facilities and local attractions.
9. Business Centre
This section of the front office provides for all secretarial needs of the guest such as
photocopies, faxes, binding, web browsing, etc. A small meeting/conference room may
also be the part of the business center for use of the guests. This is manned round the
clock and is easily accessible to the guest.
10. Guest Relation Desk
Located in the lobby area strategically placed to ensure that all guest walking into the
hotel are seen. The GRE ensures the inspection of rooms, welcome of VVIP, SPATT,
HWC, etc. She coordinates specific guest request/query with the concerned department
(of the hotel).

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11. Travel Desk
Travel desk is in-charge for all guest needs such as car rental, ticketing and itinerary
planning. Hotel may sometime outsource these services to an external agency.
1.3 Facilities provided by Hotel
The hotel is a short-term company offering paid accommodation. The facilities
available range from small rooms with moderate quality mattresses to larger, higher
quality beds, dressers, refrigerators and other kitchen facilities, upholstered chairs, flat-
screen TVs and end suite large suites. Small budget hotels may only
provide the most basic customer service and facilities. Larger, higher-priced hotels may
provide additional guest facilities such as swimming pools, business centres, child care,
conference and event facilities, tennis or basketball courts, gymnastics, restaurants, day
spas and social Functional service. Hotel rooms are usually numbered (or provided in
some smaller hotels and B&Bs) so that guests can identify their room. Some boutique
high-end hotels have custom decorated rooms. Some hotels provide meals as part of
accommodation arrangements. In the UK, the law requires the hotel to provide food
and drinks to all guests within a certain
period of time. In Japan, the capsule hotel offers a small room for sleeping and shared
bathroom facilities only, which has to developed in our country
The Indian hotel industry is currently listed as one of the government’s priorities in
their budget. So, tax deductions can be reduced or exempted. Twenty-nine twenty-tooth
ST Date20.06.2012. At present, the hotel industry is plagued by various taxes, i.e.,
service tax, Luxury tax and value-added tax ultimately lead to cascading effects. The
three taxes What is levied is the U.S. value-added tax and luxury tax, and U.S. service
tax central. VAT rates vary from state to state (usually between 12% and 12% 14.5%),
luxury tax depends on the tariff and country of the room (usually not equal) Nothing to
12%). Similarly, the service tax also varies depending on the type of service. For rooms

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with rooms for duties exceeding 1000 INR, the service tax is applicable to 60% of the
room rate. In addition to VAT (ranging from 12 to 14.5%) and luxury tax anywhere.
Be applicable. If food and beverage costs are food and beverage, service tax applies to
40%. The bill or effective tax rate is 5.8% except for VAT @ 12 to 14.5%. In the case
of social. The applicable service tax rate for functions (marriage, seminars, etc.) is 30%
reduce emissions by 10.15%.
Challenges to Hotel Industry
1. Shortage of skilled employees
One of the greatest challenges plaguing the hospitality industry is the unavailability of
quality workforce in different skill levels. The hospitality industry has failed to retain
good professional.
2. Retaining quality workforce:
Retention of the workforce through training and development in the hotel
industry is a problem and attrition levels are too high. One of the reasons
for this is unattractive wage packages. Though there is boom in the service
sector, most of the hotel management graduates are joining. Other sector
like retail and aviation
3. Shortage of rooms:
The hotel industry is facing heavy shortage of rooms. I t i s estimated that the
current requirement is of 1,50,000 rooms. Though the new investment plan
would add 53,000 rooms by 2011, the shortage will still persist.
4. Intense competition and image of India:
The industry is witnessing heightened competition with the arrival of new players, new
products and new systems. The competition from neighbouring countries and negative

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perceptions about Indian tourism product constrains the growth of tourism. The image
of India as a country overrun by poverty, political instability, safety
concerns and diseases also harm the tourism industry.
5. Customer expectations:
As India is emerging as a destination on the global travel map,
expectations of customers are rising. The companies have to focus
on Customer loyalty and repeat purchase.
6. Manual back-end:
Though most reputed chains have IT enabled systems for property management,
reservations, etc., almost all the data which actually make the company
work are filled in manual logbooks or are Simply not tracked.
7. Human resource development:
Some of the services required in the tourism and hotel industries are highly
personalized, and no amount of automation can substitute for personal service
providers. India is focusing more on white collar jobs than blue collar jobs.
The shortage of blue-collar employees will pose various threats to the
industry.
PEST Analysis of hotel Industry
1. POLITICAL FACTORS:
• Govt. policy affects the business in very deep
• The arrival of low-cost airlines and associated prices are having been given
domestic tourist a host of option
• Government focus a tourism industry e.g. “ATHITHI DEVO BHAV” opening
up opportunity for the hotel industry.

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• More over the government decision to substantially upgrade 28 Regional airport
I smaller tour and privatization and expansion Delhi and Mumbai airport
industry I India.
• In the govt of India’s “Incredible India” destination campaign has also helped
the growth of domestic and international tourism and consequently the hotel
industry.
• Removal of number of restrictions in excise on outbound charted fight including
those relating to frequency and size of aircraft.
• The govt decision to treat convention centres as port of core infrastructure has
also fuelled the demand of hotel room.
• For past few years the boom in India’s hospitality industry has been fuelled by
favourable political situation.
• Investment of US $11 bn over the next 2 years is expected to be earmarked for
hotel industry in India.
2. ECONOMICAL FACTORS:
In economical effect industry has to check out that what the GDP of the industry
is. The GDP of the hotel industry is contributed to 13.21% in 2007
➢ The hotel industry in India is going through an interesting phase one of the
major reason for the increasing in demand for hotel room in the country seen
till recently is the beam in the overall economy and high graph in shelter like
information technology.
➢ Now slowdown fear is now hovering on the sector. In India form medium to
long term the fundamental are very perishing. The continued economic or with
increased in test in the India market and improved international access.
➢ The leapt of global economy melt down is being felt by upcoming hotel project
in India some of these venture are like to be delayed or put a hold.

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➢ The hotel industry in India going through on interesting phase one of the major
reasons for the increase in demand for hotel room in the country seen will
recently boom in overall economy and high in sector, like information
technology, telecom, retail and real estate.
➢ A flourish economy helped boost demand for the industry to encourage the
tourism sector the govt is planning to propose a conditional 10-year tax holiday
for tourism.
3. SOCIO- CULTURAL FACTORS:
Socio cultural factor includes two parts
A) Socio
B) Culture
If any industry is show towards the society than you can understand that society re
developing the culture. If you understand the socio factor than you can understand the
cultural factor.
A) Socio factor:
It include the demographical factor like
▪ Population
India is the second largest population country of the world more than 110 crore
population is there. So, because of high population it is the positive effect towards the
hotel industry because as population are more hotel industry get more traffic & also
occupancy rate is increase at the time of marriage season.
▪ Domination of male & female
In India male are taking maximum decision than the female but in European country
the decision is taken by the female so also it affects the hotel because if female want to
go for some enjoyment in outside with her life partner & if life partner is not ready than
how she go outside so it affects the hotel industry

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▪ Literacy level
Literacy level is law in India compare to western country but literacy level is high
compare to neighbour country like Priyanka, Pakistan, Bangladesh, Nepal, etc. so
if education level is high than students are go to study in other state & or in other
country also other country’s students come to India so they have stay in hotel so it the
positive effects to the hotel industry so industry have to show that what is the literacy
level in country.
▪ Income level
Now a days the income of a people increasing day by day. if income will increase than
people want more enjoyment so it is the positive affect to the hotel industry.
▪ Average age of society: -
In India there are teenagers & youngster are more than the alder’s people & in America
the mature people are high than the youngster so in India teenagers & youngster people
want more enjoyment by going in hotel & picnic etc. so it is the positive affects to the
hotel industry.
B) Cultural Factor:
Culture means it is the set of Norms, value of ritual, philosophy of country is the highest
important to any industry. If you are not knowing the culture of any country than you
cannot do the business in that country
C) Language:
Language is also playing an important role in any country. Because whatever you
communicate in your language it may some different meaning in other country.
4. TECHNOLOGICAL FACTORS:
Technological factors include following factor.

22
a) Status of technology:
❖ Advance technology
❖ Moderated technology
❖ Suitable infrastructure for technology
Hear hotel industry have to check out that what technology they are using right now
whether it is advance, moderated, or outdated technology. In hotel industry they are
using moderated technology.
b) Pace of technology:
Pace of technology means how fast technology is changing in the country is changing
in the country. In the country like America, China, Japan, India the technology is taking
change at very fast rate as compare to China, Japan, & America technology the Indian
is not fast growing as in that country so it is the backward point to hotel industry in
India.
c) Cost of technology:
Cost of technology means what is cost that acquire by adapting the technology.
Marketing Mix
1. Product Marketing
Product: high quality facilities accompanied by exemplary personal service,
differentiated from competition quality with the overall brand strategy has proven to be
a successful approach generating high levels of repeat business.
2. Pricing
Pricing strategy has been consistent with the differentiation objective, to provide added
value for a reasonable rate as opposed to discounting and de valuing our products and
services.
Room rates quoted are net of tax and service, are per night, per room with continental
breakfast included.

23
3. Place
Place: product and service information are sold to the guest via personal selling, direct
marketing, advertising and the Internet. Delivery channels include travel agents and
international reservations systems.
4. Promotion:
Promotion: primary focus will remain on mass communication via print ads in trade
publications and on the Internet. Direct mail campaigns to existing and prospective
clients will increase as a cost-effective means of targeted campaigning.
Personal selling in the local market will remain an important element of the mix in order
to continue to build long-term relationships within the local community and
generate high levels of corporate activity.
Public relations activities will continue to play an important role in the marketing mix,
presenting the hotel as a supportive member of the community and participating in
significant local events.
Advertising:
The following are the advertisement medias that used.,
➢ Medias
➢ Tv
➢ Social media
➢ SMS
➢ Hoardings and fliers
➢ Monthly mailers
➢ News Paper and Magazines
➢ Campaign events
➢ Theatre events
➢ Celebrity performances

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Marketing Strategy
Direct Marketing
The Park’s direct marketing is handling by their PR agency. The park will buy select
targeted list of corporate companies and send them information about Good Hotels.
Website Marketing Strategy
The Parks main website marketing strategy hinges upon making sure all major travel
sites such as Expedia.com, Orbitz.com, and Hotels.com list The Park hotel when
customers search for hotels in our area.
Sales Plan
Our sales plan hinges upon our sales strategy, sales process and, prospecting plan. As
long as we follow the plans laid below, we should be in good shape.
Sales Strategy
It will be important to remain competitive on price, as well as amenities. The corporate
accounting department wants to make sure they limit the amount of money spent per
night per
SWOT Analysis of The Park:
Strengths
1. A very wide variety of hotels are present in the country that can fulfil the demand
of the tourists.
2. There are international players in the market such as Taj and Oberoi. Thus, the
needs of the international tourists’ travellers are seen to while they are on a visit to
India.
3. Manpower costs in the Indian hotel industry is one of the lowest in the world. This
provides better margins for Indian hotel industry.
4. India offers a readymade tourist destination with the resources it has. Thus, the
magnet to pull customers already exists

25
Weaknesses
1. The cost of land in India is high at 50% of total project cost as against 15% abroad.
This acts as a major deterrent to the Indian hotel industry.
2. The hotel industry in India is heavily staffed. This can be gauged from the facts
that while Indian hotel companies have a staff to room ratio of 3:1, this ratio is 1:1
for international hotel companies.
3. High tax structure in the industry makes the industry worse off than its international
equivalent. In India the expenditure tax, luxury tax and sales tax inflate the hotel
bill by over 30%.
4. The services currently offered by the hotels in India are only limited value-added
services. It is not comparable to the existing world standards.
Opportunities
1. Demand between the national and the inbound tourists can be easily managed due
to difference in the period of holidays. For international tourists the peak season
for arrival is between September to March when the climatic conditions are suitable
whereas the national tourist waits for school holidays, generally the summer
months.
2. In the long-term the hotel industry in India has latent potential for growth. This is
because India is an ideal destination for tourists as it is the only country with the
most diverse topography. For India, the inbound tourists are a mere 0.4% of the
global figures.
Threats
1. Guesthouses replace the hotels. This is a growing trend in the west and is now
catching up in India also, thus diverting the hotel traffic.
2. Changing trends in the west demand similar changes in India, which here are
difficult to implement due to high project costs.
3. The economic conditions of a country have a direct impact on the earnings in hotel
industry. We can see that the present economic slowdown in India has led to a
51.6% fall in the industry average net profits for the second quarter of the current
financial year, 2019

26
Results
1. The hotel industry is in boom.
2. The location of the hotel is the main advantage for the hotel.
3. The customer survey says that most of the customers are happy.
4. There must be an innovation in marketing strategy.
5. Effective marketing can raise the business of the hotel.
6. Event conducting (fashion shows, DJ, Stage performance) have an important role in
profit generation.
Suggestions
1. Prices should be rescheduled
2. Direct marketing must be more efficient.
3. Marketing strategy should be revised.
4. Tour Packages should be introduced.
CONCLUSION
On the basis of overall study on Hotel Industry it’s found out that the hotel, hospitality
industry is in a booming stage. The income generated by India from tourism is growing.
I was really surprised to see during my study that the hotel industry is really growing
even if it has some challenges like any other industry.
The hotel can more concentrate on direct marketing and web marketing. It will surely
help to increase the business of the hotel & it should concentrate to give more value for
the customers money as some of the customers feels that value for money is not.
No doubt that Hotel Industry growth towards the progress of economy is positive. But
the challenges confronting the industry segment are giving it a low customer base. these
problems could be overcome easily by revising marketing strategies and also there
should be effective direct marketing.

27
1.4 GST INTRODUCTION -
GST was introduced in February 2006 and announced the date of its implementation in
2010.January 2007 Dresher released first GST. February 2007 Finance Minister
announced introduction of GST from 1 April 2010 in budget. The government came
out with a first discussion paper on GST in November 2009.Introducing in 115th
constitution Amendment (GST) bill in the year 2011. The proposed rate of GST on
Goods is 20% out of which 12% central and 8% state. For Essential goods 12% of
which 6% state and 6% central.
For services 16%, that is 8% state and 8% central. However, Vat for state is 12.15%
and for Central 26.5%. There is .5 % differ. It is not a perfect tax levied under central
tax. In state levied 22% overall but VAT 12.15 % only. Therefore, this is not a
perfection of tax levied in GST.
What is GST?
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods
and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came
into effect on 1st July 2017; Goods & Services Tax Law in India is
a comprehensive, multi-stage, destination-based tax that is levied on every value
addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply
of goods and services. This law has replaced many indirect tax laws that previously
existed in India.
GST is one indirect tax for the entire country.
So, before Goods and Service Tax, the pattern of tax levy was as follows:
Under the GST regime, the tax is levied at every point of sale. In the case of intra-state
sales, Central GST and State GST are charged. Inter-state sales are chargeable to
Integrated GST.

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What are the components of GST?
There are 3 taxes applicable under this system: CGST, SGST & IGST.
❖ CGST: Collected by the Central Government on an intra-state sale (Eg: transaction
happening within Maharashtra)
❖ SGST: Collected by the State Government on an intra-state sale (Eg: transaction
happening within Maharashtra)
❖ IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra
to Tamil Nadu)
In most cases, the tax structure under the new regime will be as follows:
Transaction New
Regime
Old Regime
Sale within
the State
CGST +
SGST
VAT + Central
Excise/Service tax
Revenue will be shared equally
between the Centre and the State
Sale to
another State
IGST Central Sales Tax
+ Excise/Service
Tax
There will only be one type of tax
(central) in case of inter-state
sales. The Centre will then share
the IGST revenue based on the
destination of goods.

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GST ON HOTELS SECTOR:
Hotel industry plays a vital role in the development of services sector. Hospitality plays
a major role in this sector. Tourism and Hotel paves the way for development of
exchange currency in India. Star hotels in various places connected with tourism places.
People from various countries traveling throughout the world want to stay and enjoy
the whole day. Industry sources said that the average combined tax rate is in the range
of 18% to22%. Under the new GST if we stay in dinning at five stars is more expensive.

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However, budget hotels have been spared with room rates of less than Rs.1000/- is nil,
between (Rs.1000 to Rs.2500) is 12%, (Rs2500 to Rs5000) is 18% and aboveRs.5000
is 28%.
1.5 DIFFERENT RATES OF GST -
Sl. No. Room Tariff Per Day Rate of Tax
1 Less INR 1,000 0%
2 Between INR 1000 but less than 2500 12% With Full ITC
3 Between INR 2500 but less than 7500 18% With Full ITC
4 INR 7500 or above 28% With Full ITC
RENT A CAB
1 Rent a cab (If fuel cost is borne by the service
provider) 5% with No ITC.
ITC shall be available if cab
is booked from other cab
operator.
2 Rent a cab (If fuel cost is borne by the service
recipient)
18% with ITC Credit.

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Supply of Food/drinks in restaurant
Sl. No. Criteria Rate of Tax
1 Supply of Food/drinks in restaurant not having facility of
air-conditioning or central heating at any time during the
year and not having license to serve liquor.
12% With Full ITC
2 Supply of Food/drinks in restaurant having facility of air-
conditioning or central heating at any time during the year
18% With Full ITC
3 Supply of Food/drinks in restaurant having license to serve
liquor
18% With Full ITC
4 Supply of Food/drinks in outdoor catering 18% With Full ITC
5 Bundled service by way of supply of food or any other
article of human consumption or any drink, in a premise
(including hotel, convention center, club, pandal, or any
other place, specially arranged for organizing a function)
together with renting of such premises
18% With Full ITC
6 Supply of Food/drinks in air-conditioned restaurant in 5-
star or above rated Hotel
18% With Full ITC
7 Services by way of admission to entertainment events or
access to amusement facilities including exhibition of
cinematograph films, theme parks, water parks, joy rides,
merry-go rounds, go-carting, casinos, race- course, ballet,
any sporting event such as IPL and the like;
28% With Full ITC

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FORIEGN CURRENCY EXCHANGE SERVICES
1
In case of currency exchange to its guest 18% with ITC Credit, but
valuation shall be done as
per valuation rules
Valuation of currency Rules
1 Between INR 0 to 1 Lakh 1% or ₹ 250/-, Whichever is
higher
2 More than INR 1 Lakh to 10 Lakhs ₹ 1,000 + 0.50%
3 More than INR 10 Lakhs
₹ 5,000 + 0.10% or ₹
60,000/-, Whichever is
lower
Other Services
1 Renting out the premises for events, conferences 18% with full ITC Credit.
3 Business support services 18% with full ITC Credit.
4 Telecommunication services like telephone, fax, Wi-
Fi.
18% with full ITC Credit.
5 Laundry services 18% with full ITC Credit.
6 Gymnasium services 18% with full ITC Credit.
7 Club Facility. 18% with full ITC Credit.

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Why does India need GST?
GST is being introduced for two reasons the current Indirect tax structure is full of
uncertainties due to multiple rates. Due to multiple forms, GST tax complexity in the
prevailing tax regimes. The tax structure in India comprise of two taxes direct taxes and
Indirect taxes. Direct tax includes income tax, corporate tax, and wealth tax. Indirect
tax includes Excise duty, Custom duty, Service tax, vat and octroi tax. Progressive tax
increases the rate of tax for increasing value or volume. Regressive tax decreases the
tax rate for increase the value or volume. Proportion tax fixed rate of tax for every level
of income or production.
GST is newest and indirect taxation in India that has a huge impact on business both
big and small and change the way of economy functions. It is important to understand
the current indirect taxation system. Direct taxes such as Income tax are borne by the
person liable to pay the tax, this means that the tax burden cannot be shifted to anyone
else. The liability of indirect taxed can be shifted to another person, the person liable to
pay the tax can collect the tax from someone else and then pay it to the government,
shifting the tax burden. The GST tax falls under this category. The current indirect tax
structure comprises of central and state taxes. Central tax levied by the central
government including CST and Excise duty. State taxes levied by the various state
governments (VAT, Service tax) its replacement to complex sales tax. It overcomes a
cascading effect of tax. It applied on Value added portion in sales price. It is not uniform
in nature; differ to state. Differ rates of taxation for different good and services.

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The Indian hospitality industry has emerged as one of the key drivers of growth among
the services sector in India. Due to the variety of businesses, the hospitality industry is
usually one of the largest revenue producers for countries. The growth in the hospitality
sector and its contributions to the GDP will continue to be substantially higher than
other sectors of the economy on the back of huge tourism potential in the country. Hotel
brands over the last decade and a half proliferated on the principle that the hotel sector
is more a services-based industry than a realty industry. They have over this period
organized the sector and are steadily becoming the bedrock of the hospitality industry
in the country.
The hospitality industry used to pay multiple taxes (VAT, luxury tax, and service tax)
under the erstwhile VAT regime. A hotel where the room tariff exceeded INR 1,000,
was liable for service tax at 15 percent. An abatement of 40% was allowed on the tariff
value, thus the effective rate of service being 9%. The Value Added Tax (ranging
between 12 to 14.5%) and luxury tax, was applicable over and above this. However, for
restaurants, there was 60% abatement which meant that the service tax was charged at
an effective rate of 6% on the food & beverage bills, apart from VAT (12 to 14.5%).
Bills for bundled services like social functions (seminars, marriage etc.), were taxed
with an abatement of 30%. In the erstwhile regime, the end consumer used to pay tax
on tax, thereby increasing the cost. The hospitality sector did not get any input tax credit
on the taxes they paid, as central taxes like service tax, could not be set off against state
taxes (VAT) and vice-versa.
What Is the GST Rate for Hotels?
Under the GST law, there isn’t a flat tax rate for hotel rooms. Instead, the tax for hotel
rooms is based on price. The price levels and corresponding GST rates are:
Less than ₹1000: 0% GST
₹1000 – ₹2499: 12% GST
₹2500 – ₹7499: 18% GST
₹7500 and higher: 28% GST

35
If your hotel is on the upper end of the mid-range price scheme, this is good news.
Originally, the 28% bracket included all hotels at ₹5000 and higher. The government
changed the limits after it encountered resistance from the hotel industry. Budget hotels
benefit from the GST, while the most high-end hotels are likely to see a price increase.
It’s not uncommon for hotels to use different room rates depending on the season, the
day of the week, and the number of rooms that are unsold. If you’re pricing a room at
₹2400 on Thursday and ₹3000 on Friday, the tax rates will be different for each day.
It’s important to set up your accounting system to add tax automatically based on the
room price.
Since the GST went live, the hotel industry in India has come across some confusion
relating to room price. The law states that GST on hotel rooms is based on the “declared
tariff,” or the rates you set for each room and provide to the government in advance.
But what happens when a customer books using a discount website like Booking.com?
Imagine that you have a room priced at ₹8000, which would attract a 28% GST. A
customer might find that room for ₹7400 on a third-party website and assume the GST
would be 18% according to the rate slabs. But since you told the government the room
cost ₹8000; you’d still need to charge 28% GST. This discrepancy increases costs for
customers, which causes problems for hotels. As a result, hotel industry associations in
India have been calling for the government to set GST based on the invoice cost rather
than the present rates.
Using the Input Tax Credit
One of the biggest benefits of the GST is the input tax credit. When you buy supplies
and services for your hotel, you pay GST. With the ITC, you can subtract the taxes that
you paid from your GST liability. So, if you paid ₹1000 in GST, and you owe ₹1500,
your final tax bill is only ₹500. Since your hotel probably spends a great deal of money
on everything from laundry services to new bedding, the ITC can go a long way toward
reducing your tax bill.

36
Input tax credit is available:
• In case of all purchases of materials for day to day operations of the Hotel.
• In case of purchase of capital goods like furniture & fixtures etc., cutlery, bed
linen, utensils etc. Plant & Machinery
Input tax credit is not available:
• For purchase of Liquor, input tax credit not available.
• New investment in building (immovable property) self-constructions.
Hotel industry has been given a major relief by providing that the rate of tax on
accommodation service shall be based on Transaction value instead of declared tariff.
This has been illustrated with the help of examples as below:
1.6 The Need for GST InIndia
According to the current indirect taxation scenario running in India; state government
imposes VAT, luxury and entertainment tax, entry tax and taxes on betting and
gambling; whereas the central government levies excise duty, service tax, customs
duty and central state tax.
This shows that, for goods produced or manufactured within the country and then
consumed later on; VAT is computed on a value which includes excise duty. And
with different government imposing them, the credit of VAT is not available against
excise and vice versa.
➢ This indicates a cascading effect of taxes, that is, a currently functioning tax
over tax regime.
This leads to a high-cost and inefficient tax structure prone to revenue leakages.
Thence, the need for a comprehensive indirect tax structure came up, giving way to
Goods and Service Tax. So, a short while ago, the government of India passed the
long overdue GST bill, taking the whole country in a wave of extracting the
corresponding act and reforms.

37
1.7 GST IMPACT ANAYSIS –
The Hotel Arya Niwas is located at Sanchar Chand road, Jaipur is the leading hotel in
pink city called Jaipur. GST introduced in 1 July 2017 by replacing federal sales tax.
Levy of GST ranging from 13% to 15% and other at 5%. Tax to GDP ratio first
increased and then decreased when rates we raised and then steady up down. GST
introduced in 1985 is the peak rate of 15%. In Constitutional bill in 2014 rate of taxes
concessional 12% standard rate 17-18%, Luxury rate 40%.GST on global outlook 31%
to 36%. The current position of hotels and tourism hits various taxes across the channel
by VAT to output service tax and luxury tax. The vat varies from state to state and lies
between 12 to 14.5%. Similarly, luxury taxes depend on the proportion of room tariff
and usually scales between 0 to 12 %. Service tax fluctuates depends upon the service
usually 8.7 of the total room tariff food rates differ from place to place. For food and
beverage, 40 % of the bill attracts the service and it comes to 5.8 percent when
considered on total bill. For booking in hotels for occasions like marriages, ceremonies
and meetings a rebate of 30% is given and the effective service tax works out to 10.5%
on the total charges. The structure of 5%, 12%, 18% and 28% of which the service
sector will be taxed at 18 %. The 5 % slab on food proposed which is a positive of
subsumed taxed for hotels and restaurants. However, the 18 % levy on services or room
revenue compared to neighboring countries, which charge a tourism tax between 4 to 7
% rules out fair competition. The federation of Association in Indian tourism and
hospitality has pointed out amendments to the draft good and services tax law that
supports exception for tourism and hospitality business. It has highlighted that most
nations recognize tourism as a critical economic driver and follow a Tourism Rate
which is lower than 50% of the Standard Rate on other sectors.

38
Under the Goods and Services Tax, the hospitality sector stands to reap the benefits of
standardized and uniform tax rates, and easy and better utilization of input tax credit.
GST abolishes several taxes, leading to a reduction in procedural steps and easy an
ailment and utilization of input tax credit. Under the GST regime there will be only a
single charge on the bill and it would give the customers a clear picture of the tax they
are paying.
Taxation has a huge impact on business both big and small and change the way of
economy functions. This tax is combined by the central and state government. The
parliament legislation of every state will have the power to make law under the article
of 246 Act with respect to goods and services to improve by union government or by
the state government. This tax was introduced by the constitution 101st
1st
amendment
act 2017, following the governed by a GST council and its chairman is the finance
Minister of India.
Under GST, goods and services taxed at 0%, 5%, 12%, 18%, and 28%. In July 2017.
The government introduced and implemented four types of GST bills, including, central
GST, Integrated GST, GST bill of union territories and GST bill. In this paper section,
one deals with introduction, objectives, methodology, and limitation of the study.
Section 2 deals with introduction of hotel industry and the GST on it applied.
From the findings it is found out that the heritage resort enjoys 12% to 18% GST which
is less than the before tax rates which includes VAT, Service Tax and service charges

39
Impact Analysis of GST – What does it bring for Indian Hospitality
Industry?
In the current indirect tax regime, the hospitality industry is plagued by multiple taxes
of service tax, VAT and luxury tax; eventually being a victim of tax over tax. The GST
with rate dependent on annual turnover of the hotels and restaurants along with the
tariff they impose and services they provide will subsume all of these taxes and bring
them under one single entity. Moreover, it will help reduce multiple taxation, giving a
significant boost to the hospitality and tourism industry.
In GST Regime:
According to the Model law on GST which neither contains the exemptions nor the
rates of taxation, it appears that all services in relation to hotels and restaurants
would be subject to levy of GST as the same is to be treated as ‘supply’. Section 3
read with Schedule II stipulates that supply, by way of or as part of any service
or in any other manner whatsoever, of goods, being food or any other article for
human consumption or any drink (other than alcoholic liquor for
human consumption) , where such supply or service is for cash , deferred payment
or other valuable consideration shall be treated as supply. However, the rates are
expected to be in the range of 18-20%.
In the proposed GST regime, GST shall be payable by taxable persons on the supply
of goods and services. Taxable person is defined in Section 9 of Model GST law
which stipulates that a person who carries on any business at any place in India /
State and who is registered or required to be registered under Schedule III of theAct.
Further, a person is required to be registered if its aggregate turnover in a financial year
exceeds Rs. 20 lakhs all over India other than North Eastern states.
For North - eastern states including Sikkim and hill stations, the threshold limit would
be Rs. 10 lakhs.
There are no specific provisions for inclusions or exclusions of hotels and
restaurants services or any other activity related to hotels / restaurants elsewhere in
the proposed law.

40
The Pros of GST
1. Administrative Ease
GST will abolish several other taxes, leading to a reduction in procedural steps and
more chances to streamline the taxation process.
2. Improved Quality of Service
How many times have you stood waiting in the hotel lobby wondering if you would
miss your flight back home, because your bill was still not prepared? With just one tax
to compute, the checking out process at hotels and restaurants will now become easier
– another perk that the hospitality industry can brag about.
3. Ease of administration
With the implementation of GST, the multiple state and central taxes levied on
the tariffs of hotels have been done away with. This has helped to trim down the
burden of different procedures of tax application and has resulted in better
streamlining of the entire process.
4. Less confusion for customers
Tourists staying in hotels and availing some special services were largely
confused by the multiplicity of taxes in their bills. For most of them, it was di􀃞cult
to understand the difference between VAT, service tax and luxury tax. Under the
GST system, they will see only one consolidated tax on their invoice, which will
give them a clearer picture of what they are paying in Tari􀃞s and what is the tax
charged on them.
5. Enhanced quality of service
Many tourists and hotel guests have had the cumbersome experience of waiting
in the hotel lobby while their bill was being prepared. It often took longer to add
the di􀃞event tax components and prepare the 􀃞nil version of the bill to be paid
by the customer. With GST, the managers have just one tax to calculate and that

41
makes the checking-out process from hotels quicker and simpler.
6. Ease of using input tax credit
Entities in the hotel and travel industry can now easily claim and get input tax
credit. They are entitled to get full ITC (input tax credit) on the inputs that they
add. Due to the division of revenue between the centre and state governments,
the multiple taxes paid before GST regime on inputs – like cleaning supplies,
uncooked edibles for meals – could not be smoothly adjusted against the output.
The calculation of ITC will be easier in the GST system.
The Cons of GST
1. Increased Technological Burden
When the service tax was first introduced, there were a lot of mix ups. GST, thankfully,
has very clear guidelines on how each industry needs to manage their accounts and file
returns but it will require businesses to become technologically adept, increasing the
technological burden and cost for compliance.
2.Increased Costs
In Maharashtra, for instance, hotel rooms are taxed at 19% and food and beverage at
18.5%. Even with GST charged at 18%, there is minimal cost reduction in both cases.
Businesses will also look to recover the additional cost of technology and new systems
from their customers, which might – in some instances – lead to higher tariffs.
3. Lack of Parity with Asian Counterparts
As India becomes an even bigger player in the global hospitality and tourism industry,
we need services to be at par with global rates. Our Asian neighbours such as Japan and
Singapore have very low tax rates for their hospitality sector (8% and 7% respectively)
which is an important reason for them ranking high on tourist wish lists.

42
Benefits of GST on the Hospitality Sector
1. With the removal of multiple taxes and VAT’s cascading effect, taxation is
streamlined and simplified. The end-customers won’t have to pay a series of taxes
on food and beverages and hotel bills.
2. Taxation processing and calculation have been made easier and time-saving for the
hospitality industry.
3. Previous tax regime was complicated to customers and they were not able to
recognize the correct tax order. With unified tax system, it is hassle-free for end-
users to cross-check and understand the taxation structure.
4. The hospitality industry can avail the benefits of input tax credit, which means that
the hotels can reduce the tax already paid on input while paying the output.
Disadvantages of GST for Hospitality Services
The hospitality industry is facing multiple issues regarding the implementation of GST.
Compliance and maintenance process of GST is complicated as there are multiple GST
rates (5, 12, 18, and 28) for different categories of services and goods offered. To avail
input tax credit’s full advantage, businesses have to match outputs and inputs based on
the tax rate applied.
1. Although GST may have reduced end-user prices, if hotels spend extra on
maintaining compliance, they end up charging more to customers. This will
ultimately reduce the positive impact of GST in decreasing end-user costs.
2. If SMEs fail to buy products from registered dealers, they’ll not be able to avail
benefits of the input tax credit.

43
3. The complicated structure may lead to the formation of a parallel economy where
users may opt out of receiving bills. It will create numerous undocumented
transactions.
4. Many neighbouring countries have 5% to 10% GST tax slab for hospitality
services. However, in India, most hotels fall under the tax slab of 18% to 28%. This
can negatively impact the tourism industry.
Hospitality industry is a versatile field encompassing accommodation and
entertainment services, accounting, food and beverage, event management and
above all, guest satisfaction.
1.8 FINANCIAL IMPACT OF GST ON HOSPITALITY SECTOR
According to a report, Demystifying the Indian Online Traveller, Indian hotel industry
is expected to observe a growth of USD 13 billion by the year 2020. Another data says
that foreign tourist arrival (FTA) observed an increase to 10.66 Lakh in January 2018
as compared to 9.83 Lakh in January 2017.
Both the statistics show that the Indian hotel industry is one of the fastest growing
sectors of the country. However, GST impact on hospitality sector is both good and
bad. On the one hand, it is expected to attract more customers because of decreased
rates for end-users. On the other hand, the complicated compliance structure is being
frowned upon.
Although the unified tax regime may have long-term benefits, it is still receiving high
criticism from around the country. Most of the hotels have to pay 18% GST, which is
the second highest tax slab available.
Although the unified tax regime may have long-term benefits, it is still receiving high
criticism from around the country. Most of the hotels have to pay 18% GST, which is
the second highest tax slab available.
GST's impact on the hospitality sector is overall positive, as with reduced end-user
costs, the industry will likely attract more customers and tourists. Additionally, the
regime is expected to improve government’s revenue. It will have a long-term positive

44
impact, and the tax structure will be further simplified for end-customers as well as
hotels.
GST Impact on the Hospitality Sector: A Tough Journey
As GST is still in its initial stages, it puts forth various challenges. Many hospitality
businesses are unable to efficiently maintain compliance and understand how to
correctly pass down the input credit tax. Additionally, there are various tax slabs, which
make everything more complicated. If you want to understand the GST tax regime for
the hospitality sector and stay compliant, check out gstinindia.com blog for complete
information.
So, is it mostly all gloom and doom from this point onwards?
Evidently not, as this complex exercise undertaken by the government does have
some positives to offer.
The good aspect -
❖ The most obvious benefit gleaned from the GST compliance scheme is
the removal of duality of taxes and the cascading effect of VAT, service tax and
service charge done away with. For instance, the way complementary breakfasts
will now be taxed (as a bundled service under GST and not separately under VAT)
is a fine example of how the benefits are already pouring in. With no more multiple
taxes snowballing into inflated consumer bills and such small nuggets of happiness
for the average pocket-conscious consumer, this means guaranteed value for
money, thereby encouraging consumers to spend on such experiences, which
eventually helps the hospitality sector as well.
❖ Abolition of multiple taxes will likely lead to a drop in the erstwhile
lengthy administrative process of tax calculation, thereby leading to a more
streamlined taxation process, and one, that is essentially time-saving as well.
❖ Have you previously been in a position where you got confused about how
VAT, service tax or entertainment tax ended up landing in your bill? If you have

45
ever paid taxes for services without understanding why you were doing so,
sometimes even in excess of what was due to you, then this is a time to rejoice
for you can now get a clear picture of the tax you are paying. This naturally
makes for an enjoyable consumer experience, with less room for cluelessness.
❖ Despite the contentious GST slab of 28% for certain categories of hotels,
the hospitality industry as a whole, will now find it easier to claim and avail
input tax credit; something that was not possible pre-GST, as tax paid on inputs
could not be adjusted against the output liability. Now hotels shall be able to take
advantage of credit on almost all durables and raw materials purchased, and
construction and renovation carried out in furtherance of the business, subject to
certain conditions, those being: Possession of tax invoice/debit note, receipt of
goods/services, payment of tax charged to the concerned government on such
supply, furnishing of GST return by supplier.
❖ GST, though complex on the surface and challenging to grapple with at the
moment, will assuredly lead to improved financial management and increased
transparency in tax planning of establishments in the hotel industry. With
accounting taken seriously and accurate records maintained in profitability books
of hotels, there will be less room for tax avoidance/evasion, thus paving the way
for legal and corrupt-free proliferation of the hotel industry.
The bad aspect -
❖ The significance of a robust hospitality software cannot be discounted, and
while this sector takes the lead in adapting to technological advancements for
maintaining its reach and reliability in the market, the response of the industry to
the onslaught of GST has been at most, cautious and resentful. With the utter
complexity inherent in the GST compliance/implementation process and filings
mandated at multiple stages, this will mean added technological burdens,
increased compliance costs and a lot of time and effort pumped in, making the
journey seem longer and more exhausting.

46
❖ With more money being invested in being GST compliant, hotel and restaurant
businesses might end up recovering the same from their customers, leading to
higher tariffs, which will, in a way defeat the purpose of GST as consumers come
a full-circle and continue paying more than what they need to while availing cross-
services as well. For example, the fact that electricity despite being a significant
input cost for the hospitality industry has been kept exempt from the purview of
GST, predictably means solar and wind power companies will not be able to avail
input tax credit on fuel and machinery used against the output (electricity), leading
to the surplus tax being rolled over to the end consumer, thereby making power
consumption a costlier affair for the common man. Ironically, with electricity
being an exempt subject under GST, even hotel businesses will not be able to avail
input credit on taxes paid for electricity, thus, rolling it over to consumers
❖ Though Small and Medium Enterprises (SMEs) are set to gain immensely from
the current GST tax regime, they may now be obligated to purchase commodities
from registered dealers only , failing which, they would be liable to pay full tax
on supplies as would have been due under the normal tax scheme. This is a glaring
disparity since composition dealers were earlier (under the VAT scheme) not
mandated to pay taxes on supplies delivered by unregistered persons. Not only
this, since they are not allowed to avail input tax credit on supplies purchased, this
will ultimately have them pay taxes twice – first, to the registered dealer, and
second, to the government. It also does not help that many SMEs may not even be
able to avail of this feature unless they strictly deal in inter-state supplies.
❖ As observed quite rightly by industry players, the surge of GST might lead to the
emergence of a parallel economy, where some people do not opt for bills, leading
to thousands of unaccounted transactions, and ultimately defeating the objective
of GST. This is not an entirely impossible reality, given that people in India
already try and sneak in transactions without billing the same, leaving this sector
vulnerable to corruption and exploitation.
❖ This is an opportune time when tourism and hospitality industries have exploded
around the world throwing the spotlight harder on these revenue-generating

47
pillars, and neighbouring countries in the Asian subcontinent (such as Japan,
Singapore, Myanmar, Thailand, Indonesia, Dubai and the like) have indeed
stepped up to this nation-building mission by keeping taxes low (5-10%), thus
ensuring more footfalls in these tourism hotspots. In contrast, India’s steep 12-
28% tax slab levied on stakeholders in the hospitality sector will only serve
to drive tourists away and have them flock to more lucrative options, despite our
country getting ranked high on tourist wish lists.
❖ Comparison between the pros and cons of GST on a basic, mundane level points
to a mixed bag of gifts and unexpected, unwelcome twists thrown in together. At
best, GST impact on the hotel industry may be perceived as a double-edged sword,
where as a hotel or restaurant business you simply cannot take advantage of the
leniency, without feeling the pinch of the mandates.
THE JOURNEY AHEAD –
For starters, it would not be an exaggeration to expect small and large businesses,
as well as related industry players to experience frayed nerves for at least six more
months, given all these stakeholders would now to have to go through the grind of
comprehending how to navigate the GST portal and all that it entails. With
registration and filing requirements now becoming a non-negotiable zone,
companies will find themselves struggling to keep up with the pace, while
attempting to make a seamless transition into GST world.
It has been close to two months since GST came into effect, and yet, many firms
still have no idea how they can pass on the benefit of the input credit to customers,
given they are clueless about the amount of credit they will receive that can be
later adjusted. Moreover, working capital might shoot up for businesses dealing
with low-grade and unregistered vendors who will not be able to claim input credit
on purchases made.
There is still a lack of understanding about the tax slabs for various categories of
hotels and restaurants, with the possibility that consumers may still be paying
double taxes – multiple taxes under the previous system as well as GST. This is
something that can only be tackled with time, and with adequate training and
guidance provided to these industry players. Companies and firms too will need to

48
invest substantial time, resources and effort on their part to get GST-compliant to
avoid legal glitches later.
While GST has been heralded as a move that will compel the hospitality industry
to upgrade its services at standardized rates, murmurs and protests from different
corners in the industry continue to make their way in – with hopes that a standard
rate of 10-15% would be accepted and implemented, thereby lending a competitive
edge to the Indian hotel industry against the backdrop of its neighbouring
counterparts – who also happen to be in the race – for the top spot in the tourism
and hospitality map.
Whether or not GST rates in this regard would be amended depends on how
efficiently the hospitality sector manages to make this transition, while still not
crumbling under the sudden aftershock of it.
Under the GST tax outline, new terms such as ‘supply of service’, time of supply,
location of recipient of said supply, place of supply, etc. would also need to be
understood in an in-depth manner to facilitate proper categorizing of services and
ensuring a smooth transition.
The government will do well to consider bringing electricity and alcohol
consumption too under the ambit of GST, so as to do away with multiple taxes in
these segments – this will not only aid these sectors and the broader hotel industry
to operate on a more steady base, but will also pave the way for end consumers to
be benefited by these inclusions, rather than being overburdened by their
exemption.

49
CHAPTER 2
PROFILE OF THE
COMPNY

50
2.1 HISTORY -
Thirty-Five years ago, a retired engineer tried to make a dream of his come true. Fond
of traveling he wanted to open a hotel in his adopted hometown; Jaipur. A hotel that
was clean, safe and pleasant, yet affordable for a middle-class person like himself. He
owned a rundown haveli/mansion that had once belonged to a feudal lord of the old
Jaipur State.
On his request, his engineer sons left their jobs and joined him in converting the haveli
into a hotel, while the ladies of the house took charge of the kitchen. Everything was
envisioned and designed by the father and sons themselves, to the extent that even an
architect was not involved in the design of the hotel as the patriarch could not find any
that would put his dreams to paper.
And so, with the whole family engaged in its operations, Arya Niwas opened its doors
for guests with 20 rooms in 1983. As no family member was a 'hotel management'
graduate or had any exposure to regular hotels and their operations; they did what they
thought was right and fair.
Some ideals that were laid down at its inception, and have come to define Arya
Niwas are:
• High standards of cleanliness, hygiene and maintenance.
• Well-lit and well ventilated, aesthetically pleasing rooms.
• Plenty of open spaces, gardens and lawns.
• Sincere and transparent pricing policy.
• Fair and fixed prices, great value for money.
• No commission to auto/rickshaw wallets.
• Vegetarian, self-service restaurant with an open kitchen serving home like food.
• Visual on display menu, fresh preparations made every day.
• No bar or service of alcoholic drinks.
• Limited room service.
• No Tipping policy.

51
Most of these policies were quite new at that point of time and sometimes, like in the
case of open kitchen, no tips, or no commission to rickshaw/auto wallets, were against
the accepted way of running a hotel.
In spite of all forebodings of failure, the hotel was a runaway success. It grew from
strength to strength and was awarded many awards and recognitions for quality
services in its category. 35 years hence, the hotel has grown from 20 to 128 rooms. The
owner family owns and operates many more businesses today including:
2.2 Hotel Arya Niwas Subsidiaries -
Tara Niwas - A friendly small hotel,
Jai Niwas- renovated Bungalow hotel set in a nice garden,
Om Niwas- all suite apartment-hotel.
Travel : Viasat Experiences - Offers unique walking tours and rural experiences in
Rajasthan; Tours 2 Rajasthan - travel agency that promises quality and innovative tours
all over Rajasthan and North India; Jaipur Diaries - Interesting craft workshops and
activities.
Food: Chitra Cafe - Popular restaurant at Arya Niwas. Though all our hotels have
restaurants serving good home like food, Chitra Cafe has been a pioneer in many ways
and continues to be popular with guests and local Jaipur residents alike with an ever-
changing menu;
Om Niwas Bakery Line - Home like breads, cookies, bakes, preserves, pickles and
chutney in a wide range made using no chemical preservatives and additives.
Experiences: Arya Niwas is proud to be associated with Jaipur Viasat Foundation in
developing Rajasthan Rural Arts Project at Krishna Marg, Jaipur. This is a unique
centre here a visitor can see a museum dedicated to folk music, catch regular folk music
performances, meet the artists and even stay in a small guest house on premises
(Krishna Marg)!

52
The guiding light and founding father of the dream has passed away, but his vision lives
on as the third generation takes over the operations. The essential ideals, decided at the
time of inception are still held sacred, and adhered to. All our services are still family
managed and offer good value for money, but as times change, we have tried to adopt,
adapt and improve on the services, introducing features like:
• Eco-logically sensible operations and practices.
• Rainwater harvesting.
• Wi-Fi enabled buildings.
• No use of chemical fertilizers and pesticides.
• Business centre for our guests.
• Solar water heating.
Hotel Arya Niwas are constantly striving to present new and authentic experiences that
lets a visitor know our culture a bit better and to appreciate the incredibly rich heritage
that our state inherits.
All that we have learnt in travel and hospitality is through our guests.
We invite you as our teachers, and guides as we look towards many future years of
serving our guests.
Arya Niwas - Government approved 3-star hotel in Jaipur at great value for money
Centrally located hotel at Jaipur, close to M.I. Road and the old Pink City, Arya Niwas
is a renovated Heritage Haveli offering nicely furnished rooms, peaceful gardens,
verandas, courtyards and a vegetarian restaurant.
Our 100 plus year old central hall with its beautiful frescoes in natural colours, large
front lawn with its soothing atmosphere, home like food and reasonable prices make
Arya Niwas an attractive hotel to stay for Foreign as well as Indian guests, executives
on work as well as families on vacation.
Family managed, we care for the things that matter!

53
2.3 HOTEL ARYA NIWAS VALUES AND OBJECTIVES –
✓ WE CARE FOR YOUR SAFTEY NEEDS
Specially designed wheelchair friendly rooms and public areas.
Special attention for single lady guests travelling alone.
Specific non-smoking rooms.
No charges for small kids, half charges for 5-10-year olds.
✓ WE CARE FOR YOUR SAFTEY
Restricted entry to persons not staying with us.
Entire building is CCTV covered.
Family Managed, we are particular about visitors from outside.
No BAR, pub and discotheque/nightclub.
Firewall and unique id and password to each guest for accessing wi-fi
✓ WE CARE FOR LADY TRAVELLER
Entry to guest floors is restricted, visitors from outside are allowed only after the
permission of the staying guests in limited numbers for limited time
Owner's female family members are actively involved in the management of the hotel.
There is no bar / nightclub / disco on premises.
All rooms have a magic eye on the room door
✓ WE CARE FOR YOUR HEALTH
Home like food freshly made.
Special dietary requests for old / sick guests and children are welcome.
Yoga classes held on request.
Ayurvedic massage.
RO treated water.
Great value breakfast & dinner buffets.

54
✓ WE CARE FOR NATURE
Rainwater harvesting.
Chemical fertilizers are not used in gardening, harmful pesticides are used minimally.
Sewage water recycling.
Wet waste composting.
Solar water heating.
A GROUP OF HOTELS OF ARYA NIWAS HOSPITALITY
Hotel Arya Niwas
Popular City Hotel
Popular, award winning, centrally located hotel in a heritage building offering all
modern amenities while retaining the age-old charm!
Om Niwas
All Suite Hotel
Jaipur’s first all-suite hotel! Offers elegant suites, nice roof top garden & great
conference facilities in a central yet quite location.
Tara Niwas
Boutique Hotel
Small, intimate and beautifully appointed; Tara Niwas is a quiet, green, pleasant and
well-furnished guest house with a great location.
Jai Niwas
Garden Hotel
An oasis of peace and greenery; Jai Niwas is like a resort in the middle of Jaipur! Close
to the old city and bazaars, yet a world away!

55
Jaipur Jantar
Best Hostel
A magical backpacker hostel in a renovated bungalow offering clean, safe and fun
shared accommodation for the young at heart travellers.
Arya Hotels Jaipur - offers mid-range hotels in Jaipur, Vegetarian Hotels Jaipur. Good
options for Jaipur accommodation, and some of the best budget hotel in Jaipur,
Rajasthan, India providing unique heritage accommodation among hotels at Jaipur. For
a good hotel at Jaipur and best located hotels in Jaipur. Built in a renovated haveli, it
can be called a heritage hotel in Jaipur. It is approved three-star hotel of Jaipur by
Rajasthan tourism in Indian hotels at Jaipur. Om Niwas is only all suite hotel of Jaipur
with moderate tariff, one of the finest heritages 3-star Jaipur luxury hotel having
conference and banquet hall in Jaipur. Jai Niwas is most popular among guest house in
Jaipur.
Facilities & Services
❖ We offer these services to make your stay comfortable:
❖ Wi-fi enabled building.
❖ Business Centre offering:
❖ Hi-speed Broadband Internet surfing, e-mail and fax.
❖ Data transfer, colour printing, scanning and DVD/CD burner.
❖ 24-hour long distance dialling including collect calls.
❖ Secretarial and photocopying services.
❖ Web conferencing
❖ Same-day Laundry service.
❖ Doctor on call.
❖ Foreign currency exchange at very attractive rates.
❖ Air-Conditioned Meeting Room (20 seats in U-shape).

56
❖ Exchange library and reading room.
❖ Travel desk offering:
❖ Airline, train and bus ticketing.
❖ Taxi car / coach hire.
Package tours, hotel bookings, taxi hire and services of guides/interpreters for
Rajasthan and North India through Tours 2 Rajasthan.
Souvenir shop with a wide collection of handicrafts, silver jewellery, cosmetics, books,
etc.
Facilities: Air Conditioning, Writing Desk, Fridge, Safe Deposit Locker, Bath
Tub/Shower, 32" LCD TV with Satellite Channels, Seating Area, Electric Kettle, Sofa
Cum Bed.
The shop is mentioned favourably in several guide books, especially for its fixed and
fair prices.
➢ Cultural shows and theme dinners on request.
➢ Eco-logically sensible operations and practices.
➢ Tipping is discouraged.
➢ Standby Backup generator.
➢ 2 elevators
➢ 24-hour reception
➢ Private parking, limited accommodation available for drivers.
2.4 TYPES OF ROOM –
✓ AC Super Deluxe Double
✓ AC Deluxe Double
✓ AC Executive Superior Double
✓ AC Superior Double
✓ AC Value Small Double
✓ AC Standard Single

57
✓ AC Economy Single
Rates as on 1 Nov, 2019
Rooms 2 Persons 3 persons 4 persons
AC Super Deluxe 3750 4550 5350
AC Deluxe 3450 4250 Extra Bed- 750
AC Executive
Superior
2995 3795 Extra Bed- 750
AC Superior 2750 3550 Extra Bed- 750
AC Value Small 2095 2495 Extra Bed- 750
AC Standard 1600 1800 Extra Bed- 750
2.5 Chitra Cafeteria - Vegetarian Restaurant in Jaipur
Quite unlike a normal hotel restaurant, there are several unique features that make
Chitra Cafeteria a popular choice with our guests as well as the locals.
It offer fresh, home-like Vegetarian (+Eggs) food made under strict supervision. It
serve North Indian and Continental cuisine with a minimal use of oil and chillies. The
menu changes every day which ensures a freshly made dishes
Visual Menu: A unique feature of Chitra Cafeteria - All available dishes for the day are
put on display, which means you know the portion size as well as the product that you
will be getting, no surprises and guess work required as you try to decipher the menu!
We make our own bread, jams, cakes and other bakery products without using any
chemical additives. The honey used comes from the Litchi fruit orchards of the
Himalayan foothills. Fresh salads, using organic vegetables whenever
possible; availability of seasonal Indian vegetables and not just the regular

58
curries, authentic Italian pasta are some of the things that make food at the Chitra Café
We have an open kitchen, and guests are encouraged to take a look at the kitchen,
ensuring that the highest levels of hygiene are maintained.
We offer a good value for money, with reasonable prices. Apart from A - La - Carte
menu, we also serve an elaborate daily breakfast buffet (Rs. 240 / person). We can
arrange for 3 - course, lavish meal buffets as well at Rs. 400 / person. Guests can also
ask for hygienically packed fresh meals in a box for takeaway.
We sell wide range of homemade breads, jams & preserves from the counter. Take a
look when you are next at Arya Niwas.
Arya Niwas Ansar Chandra Rd (behind Amber Tower), Dependable old hotel with free
Wi-Fi, arranged around a couple of intimate courtyards, with a lovely expanse of lawn
and spacious veranda out front. Rooms are nicely furnished; all come with TVs a/c,
apart from a few air –cooled singles. They also offer city tours, including a 3hr guided
stroll of the pink city...
Hotel Arya Niwas rates from Rs. 1050. s/d with AC from Rs. 1150/1600; Housed in a
nicely renovated mansion hidden behind a scruffy four-storey block, this is a popular
traveller haunt, with a travel desk, bookshop, yoga lessons (Rs.100) and good-value
massage treatments (from Rs.350). The clean rooms face an inner courtyard and vary
in layout and size so check out a few. It’s a little drab in general, but there’s certain
charm, not least be-cause of the extensive colonial-style terrace overlooking a soothing
expanse of lawn in front of the hotel’s excellent Chitra Café.

59
CHAPTER 3
RESEARCH
METHODOLOGY

60
3.1 TITLE
➢ IMPACT OF GST ON HOTEL INDUSTRY
3.2 OBJECTIVE OF THE STUDY
1. The present study on GST is focus on service sector particularly hotel industry.
2. To study tax structure implied before introduction of GST on hotel industry
3. To study the GST levied on hotel industry particular in a 3-star Hotel Arya
Niwas
4. To study impact on cafeteria in Hotel Arya Niwas.
5. To analyze and find out the GST impact on customers.
6. To analyze the financial statement of hotel before and after GST.
7. To study need for GST in India.
8. To analyze positive and negative impact of GST on hospitality sector.
9. Scope and journey ahead of GST.
10.Finally, some suggestion, conclusion and recommendation.
3.3 RESEARCH DESIGN:
“Research design is the logical and systematic planning and directing a piece of
research.” - P.V. Young
In this project I work on “Descriptive Research Design”:
It is also known as quantitative research; it is designed to help executives of action that
is to make decision. This kind of design is used for more precise investigation or of
developing the working hypothesis from an operational point of view. It has inbuilt
flexibility, which is needed because the research problem, broadly defined initially, is
transformed into one with more precise meaning in exploratory studies, which in fact
may necessitate changes in research procedure for gathering relevant data.

61
The characteristic features of research are as follows: –
• Flexible Design
• Non-Probability Sampling Design
• No pre-planned design for analysis
• Unstructured instruments for collection of data
• No fixed decisions about the operational procedures
3.4 COLLECTION OF DATA:
Date collection is more of an art than a science. The methods of marketing research are
in a way the methods of data collection. The sources of information fall under two
categories.
a) Primary data:
b) Secondary Data:
In this project I work on secondary data:
The data, which is collected from the published sources i.e., not originally collected of
the first rime is called secondary data. Here the secondary data is data collected from
the search engine, company’s brochures, Tax report, pamphlets, catalogues and the
website.
3.5 LIMITATIONS OF STUDY:
1. The problem I faced is in summarizing the vast data in short, simple &
presentable form.
2. Lack of scientific method.
3. Difficult to hit the right source of data & change according to my requirements.
4. It is a time consuming.
5. Lack of resources.
6. Lack of code of conduct and repetition may be there.

62
CHAPTER 4
ANALYSIS
AND
INTERPRETATION

63
India’s Goods and Services Tax (GST) has a big impact on the hospitality industry.
Whether you run a tiny guesthouse or a large luxury hotel, the law changes how you
handle monthly accounting. By staying up-to-date about current tax rates and possible
available credits, you can reduce your tax liability and keep customers happy with lower
prices.
Before the Indian government instituted GST in July 2017, the hotel industry had to
deal with extremely high taxes. In many states, you had to pay a range of different taxes,
including VAT, luxury tax, and service tax. For some hotels, that pushed the tax as high
as 30%. These high taxes caused many problems for hotels, such as higher prices, lower
profits, and difficulty making upgrades, just to name a few. With multiple taxes, hotel
owners also faced complicated paperwork when it came time to file tax returns.
The table shows the rate under current taxes and GST.
S.no. PARTICULARS GST RATE SERVICE
RATE TAX
VAT RATE
1 Supply of Food/drinks in
restaurant not having facility
of air-conditioning or central
heating at any time during the
year and not having license to
serve liquor.
12% With Full
ITC
Exempted
5.5% on pizza,
burgers,
sandwich, on
cooked food
except in hotels
categorized as 3
star and above.
14% on
2 Renting of hotels for lodging
purposes having room tariff
of Rs. 1ooo/- and above but
less than 2500/- per room
per day
12% With Full
ITC
Abatement
40% CC on
input services
only,
exemption
below Rs. 1ooo
3
Supply of Food/drinks in
restaurant having license to
serve liquor
18% With Full
ITC
If AC 40% OF
above value &
otherwise
exempted
4 Supply of Food/drinks in 18% With Full 40% of value

64
restaurant having facility of
air-conditioning or central
heating at any time during the
year
ITC Taxable beverages, 3
star and above,
under brand
name by brand
chain of cooked
food.
5 Supply of Food/drinks in
outdoor catering
18% With Full
ITC
60% of value
Taxable
6 Renting of hotels for lodging
purposes having room tariff
of Rs. 2500/- and above but
less than 5000/- per room per
day
12% With Full
ITC
60% of value
Taxable
8 Supply of Food/drinks in air-
conditioned restaurant in 5-
star or above rated Hotel
28% With Full
ITC
60% of value
CC allowed on
input services
only
9 Accommodation in hotels 28% With Full
ITC
60% of value
Analysis of above table –
The hospitality industry, like every other sector in the Indian economy, pays multiple
taxes (VAT, luxury tax, and service tax) in the existing indirect tax regime. A hotel
where the room tariff exceeds Rs 1,000 is liable for service tax at 15 percent. An
abatement of 40% allowed on the tariff value bringing the effective rate of service tax
down to 9%. The Value Added Tax 5.5% to 14.5% and luxury tax will still apply. For
restaurants there is 60% abatement which means that the service tax is charged at an
effective rate of 6% on the F&B bills, apart from VAT (5.5 percent to 14.5%). Bills for
bundled services like social functions (seminars, marriage etc.), taxed with an
abatement of 30%. The cascading effect of the existing indirect tax regime where the
end consumer pays a tax on tax increases the end cost. Hoteliers and hospitality
businesses do not get any input tax credit on the taxes they pay currently, as central
taxes cannot be set off against state taxes (VAT) and vice-versa and also due to
availability of abatement no input credit is available.

65
4.1 Goods and Services Tax (GST) as a tax reform
Migrating to Goods and Services Tax (GST) is a time to revinict the taxation and
remove the anomalies. Hotel industry (includes tourism) contributes to 6.23
percent to the National GDP and 8.78 percent of the total employment in the
country.
Goods and Service Tax (GST) is a destination based consumption tax which is a
levy of tax on all goods and services with the objective of expanding the tax base
through wide coverage of economic activities , mitigating the cascading effect,
reduction of exemptions , enable better compliances etc. thereby resulting into
formation of common national market for goods and services.
4.2 PRE AND POST GST RATES -
A) PRE GST
➢ VAT has 12% tax on room tariff below 5000
➢ 18% above 5000.
B) POST GST
1 JULY, 2017
GST council of India has imposed
➢ 28% GST on hotel room tariff over Rs.7,500 and
➢ 18% tax on rooms with tariffs between Rs. 2,500 and Rs. 7,500.
AFTER NEW UNION BUDGET
5 JULY, 2019
➢ The GST rate for room tariffs of Rs 7,500 and above was reduced to 18%
➢ 28%, Rate between Rs 1,000 and Rs 7,500 would have to pay 12%.

67
After Introduction Of GST-
BILL PRE GST
< 5000
PRE GST
> 5000
POST GST
< 7500
POST GST
> 7500
Bill total before tax 4000 10000 4000 10000
Luxury charge @10% NA 1000 NA NA
Service tax @2.5% 100 250 NA NA
Swachh bharat cess
@0.2%
8 20 NA NA
Krishi kalyan cess
@0.2%
8 20 NA NA
VAT @ 8.40%
14.50%
336 1450 NA NA
GST @ 18%
28%
NA NA 720 2800
Total after tax 4452 12740 4720 12800
After New Union Budget-
BILL PRE GST
< 5000
PRE GST
> 5000
POST GST
< 7500
POST GST
> 7500
Bill total before tax 4000 10000 4000 10000
Luxury charge @10% NA 1000 NA NA
Service tax @2.5% 100 250 NA NA
Swachh bharat cess
@0.2%
8 20 NA NA
Krishi kalyan cess
@0.2%
8 20 NA NA
VAT @ 8.40%
14.50%
336 1450 NA NA
GST @ 12%
18%
NA NA 480 1800
Total after tax 4452 12740 4480 11800

68
Analysis of table:
GST was introduced in India on 1 July, 2017. The hotel industry room tariff was slightly
higher the earlier Tax system i.e., VAT. GST council of India has imposed 28% GST
on hotel room tariff over Rs.7,500 and 18% tax on rooms with tariffs between Rs. 2,500
and Rs. 7,500. In comparison VAT has 12% tax on room tariff below 5000 and 18%
above 5000.
4.3 Likely Impact in GST regime on Hotel after new Budget:
Based on the latest revised Union Budget released on 5 July, 2019, it can be said that
hotel sector shall be impacted both positively and negatively under the GST regime.
5 JULY, 2019
The GST rate for room tariffs of Rs 7,500 and above was reduced to 18% from 28%,
while those between Rs 1,000 and Rs 7,500 would have to pay 12%.
Hotels with tariffs of less than Rs 1,000 do not attract tax as per an earlier decision.
Earlier, the slab of Rs 2,500-7,500 attracted 18% tax.
New GST rates is lesser than earlier rates is basically done by the government of India
to promote tourism sector in India. It helps in the economic development of India,
increases GDP and economic status of the country.
Analysis in GST slab -
(i) The multiple taxes would be replaced by one single tax, the rate of which
is likely to be between 0%-18%. The hotel industry would benefit in the form of
lower tax rate which should help in attracting more tourists in India.
Less than ₹1000: 0% GST
₹1000 – ₹7499: 12% GST
₹7500 – more : 18% GST

Project report impact of GST on Hotel Industry

Project report impact of GST on Hotel Industry

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