The move of the GST council to cut tax rates for hotels has been welcomed by the hospitality industry.

Recently, the GST Council granted the proposal to decrease tax rates on hotels, and it had been a long standing claim of the industry.

The proposal to decrease the tax from 28 percent to 18 percent for hotels was specifically extolled. Before, the council had taxed hotels with tariffs of Rs 7500 and above at 28 percent and now this has been brought down to 18 percent. Industry specialists had said the 28 percent tax section placed Indian hotels among the most taxed hotels in the world.

"The GST rate rationalization for Hotels is an extremely positive development which augurs very well for the Indian tourism industry. We are grateful to the finance minister for having considered this demand of the industry which is bound to create a good sentiment across travel, trade and hotels", said Dipak Haksar, chairman CII National Committee on Tourism & Hospitality and chief executive for ITC Hotels and Welcome Hotels.

Hotels among Rs 1001 to Rs 7500 will draw a tax of 12%. Hotels with duties of under Rs 1000 do not pull you a tax as determined earlier.

Abhishek Jain, tax partner at EY said the charge rationalization for the hotel industry as a rule should strengthen demand for this sector. "With the upcoming vacation and festive season, this was a much sought for relief by this industry especially for the premium segment hotels," he said.

Sanjay Sethi, MD and CEO of Chalet Hotels said the tax reduction will present a major boost to the hospitality and tourism industry and make India's hotels more competitive worldwide. "For companies like Chalet, reduced taxation helps us focus our efforts on key aspects like fresh investments in portfolio expansion, job creation and creating sustainable green hotels," he added.

Gurbaxish Singh Kohli, vice president of apex industry association FHRAI said the industry had been trying for the tax reduction for luxury hotels for some time.

Nakul Anand, chairman of industry association FAITH told the GST rationalization appears as a big attempt for the tourism industry.

"All ten member bodies of FAITH have worked tirelessly towards this endeavor and on behalf of FAITH, we would like to thank the government for making this happen. This adds great spurt and momentum to the hospitality industry and creates a positive sentiment that ensures more vigour and strength for destination India," he added.

Vivek Bhalla, regional VP, IHG, SWA told this is a constructive move which should help advance the market’s response largely. "With the festive and holiday season around the corner, the timing could not have been better," he added.