A REPORT

ON
“IMPACT OF GST ON HOSPITALITY SECTOR”

By
Siddharth Khanuja
23BSPHH01C1283

At
Deal Squard
Ghaziabad (Delhi NCR)

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 AN FINAL REPORT
ON
“IMPACT OF GST ON HOSPITALITY SECTOR”

By
Siddharth Khanuja
23BSPHH01C1283
Deal Squard
Ghaziabad (Delhi NCR)

Submitted to
ICFAI Business School, Hyderabad
A report submitted in partial fulfilment of the requirements of MBA program
of IBS Hyderabad
Under the guidance of

Faculty Guide: Company Guide:

Dr. Radha Mohan Chebolu Ms. Mona Choudhary
Associate Professor HR
Dept. of HR Deal Squard
IBS Hyderabad

Date of Submission: 10th May, 2024

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 Authorization

This is to certify that this is the Bona fide report submitted in partial fulfilment of
the requirement of MBA program (Class of 2023-25) of ICFAI Business School,
Hyderabad.
This report documented titled “Impact of GST on Hospitality Sector” is the
submission work of Siddharth Khanuja as the part of the competition of the
Summer Internship Program at Deal Squard Company under the guidance of Ms.
Mona Choudhary.
This report has formally submitted to Dr. Radha Mohan Chebolu, Associate
Professor, Faculty of HR, IBS Hyderabad.

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 Acknowledgement

I want to express my profound gratitude towards, Deal Squard Company for

providing me with the chance to undertake this internship study and allowing me
to explore the expertise area of GST Analysis, which was entirely new to me and
which will surely prove to be very beneficial to me in my future assignment’s,
my studies and my career ahead.
To start with, I am grateful to almighty God. My deepest regards and greatest
admiration remain to my parents and family, who have taught me how to walk on
the trodden path in the quest of the knowledge. I want to express my profound
gratitude to all those who have been instrumental in the preparation of my Final
Report.
No job is a single man’s work as there are different factors, situations and people
combined together to form the background for the accomplishment of my task.
I sincerely extend my gratitude to my company guide, Ms. Mona Choudhary,
HR of Deal Squard for allowing me to work under their guidance despite his
hectic schedule. I would also like to thank her for his continuous guidance, advice,
encouragement and support without which this report could never have been
completed.
I would like to sincerely thank my faculty guide, Dr. Radha Mohan Chebolu for
guiding and supporting my project.

Siddharth Khanuja
23BSPHH01C1283

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 TABLE OF CONTENTS
Chapter No. Table of Content Page No.
Authorization iii
Acknowledgment iv
Table of Contents v-vi
List of Illustrations vii
Abstract viii
1. About the Organization 1-4
1.1 About the organization 2
1.2 Company History 2
1.3 Vision 3
1.4 Mission 3
1.5 Range of Services 3
1.6 Company’s Target 3-4
2. Introduction 5-11
2.1 Introduction on Hospitality sector 6
2.2 Good and service tax 6-7
2.3 History of GST 8
2.4 Why does India need GST 9
2.5 Financial Impact of GST on Hospitality Sector 10
2.6 Purpose of the study 10
2.7 Learning from the Internship 11
2.8 Research Methodology 11
2.9 Limitation of the Study 11
3 Industrial Analysis 12-30
3.1 Industrial Overview 13
3.2 Sector Classification 14-15
3.3 Factors for growth of the industry 16
3.4 SWOT Analysis 17
3.5 Hospitality and Tourism under Pre-GST 17-18
regime
3.6 Hospitality and Tourism under GST Regime 18

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 3.7 Best Practices for the Hospitality Industry to 18-20
manage compliance under the GST
3.8 What is a hotel? 20
3.9 Classification of a Hotel 20-26
3.10 Impact of GST on hotel industry 26-27
3.11 How has the GST affected the competition 27-28
within the Hotel Industry?
3.12 Pros and Cons of the GST on Hotel Industry 28-29
3.13 Travel and Tourism under GST 29-30
4 Research and Methodology 31-33
4.1 Title of the Project 32
4.2 Objective 32
4.3 Collection of the Data 32-33
4.4 Limitation of the study 33
5 Analysis and Interpretation 34-48
5.1 Pre and Post GST rates 35
5.2 Analysis and interpretation of Pre & Post GST 35-36
5.3 Impact of GST on hotel under New Budget 37
5.4 Impact of GST on Restaurants/ Cafe 37-39
5.5 Effect on restaurants owner 39
5.6 Analysis of EIH Ltd 40-43
5.7 Analysis and Result: 43-48
(a) Ratio Analysis
(b) Trend Analysis
5.8 Questionnaire Analysis 48-50
RECOMMENDATION 51
CONCLUSION 52
ATTACHMENTS 53
REFERNCES 54

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 List of Illustrations
Illustration No. Title of the illustrations Page No.
1 Figure of Before and after GST 6-7
2 Figure of History of GST 8
3 Figure of Tax Structure 8
4 Table of Tax Structure 9
5 Figure of Before and After GST 9
6 Figure of Hotel and Tourism Market 13
7 Table of Hotel Classification 14-15
8 Table Market size of Hospitality Industry 15
9 Figure of Market size of Industry 15
10 Table Indian hospitality market leader 19
11 Table Hotels listed on Stock Exchange 20
12 Fig classification of hotel 21
13 Table star categories of hotels 24
14 Table Tax on hotels and accommodations 27
15 Fig. GST collection from hotels. 28
16 Table of Analysis of Pre & Post GST 36
17 Fig of Pre &Post GST of restaurant 38
18 Fig. of BS & P/L of EIH Ltd. 41-42
19 Table and Fig. of Ratio Analysis 44-45
20 Table & Fig. of Trend Analysis 46-47

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 Abstract

The main objective of the project is to study, analyze and examine the Pre and Post
movement of the GST on the hotels, tourism and travel industries. Briefly examining
and analyzing of the change of the price with the GST on the hotels and also
understanding the regional variations that varies across different regions or states within
the country.

The introduction part of the report gives an idea about the functioning of the GST, types
of the GST, tax slabs, an Introduction to the GST and Introduction to the Hospitality
Sector, its types, working and its impact on the Hotels, Tourism and Travel Agencies.

Throughout the training I got to know and understood and the implementation of the
Goods and Services Tax (GST) in the hospitality and tourism sectors that has brought
about significant changes. For hotels, the impact of GST has been two-fold. While the
standardized tax rates have simplified billing and reduced tax burden in some cases,
challenges remain regarding input tax credit and compliance procedures, particularly
for small and medium-sized establishments. Similarly, the tourism sector has witnessed
mixed effects, with the GST regime contributing to increased operational costs for travel
agencies due to higher tax rates on certain services. Overall, while there have been
teething issues, the long-term benefits of GST implementation in terms of efficiency,
transparency, and economic growth within the hospitality and tourism industries are
becoming increasingly evident.

This report summarizes the aspects of GST and the learning that I took out from them.
The aligned project has been explaining utilizing classification such as project
objective, methodology to complete it, findings and conclusions and ideas regarding
gaining knowledge specific to each aspect.

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 CHAPTER 1
ABOUT THE
ORGANIZATION

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1.1 About the Organization
Deal Squard

Deal Squard, the lean-luxe brand, has a pan India presence of over 85 hotels with
57 hotels in operation and 29 under development. The brand prides itself in its
ability to enable its guests to switch seamlessly between work and play offering
experiences that provide comfort and convenience. The Deal Squard is that the
way to the success of India is the entrepreneurial spirit of its people. Whether they
are guests, team members, or partners, together this spirit will not only foster a
stronger Deal Squard brand but more importantly give rise to a stronger ‘Brand
India'.
A company that consistently demonstrates real concern with the greatest
guarantee on pricing. We make it simpler than ever for you to remain longer, more
reasonably priced, productive, laid-back and enjoyable. Our hotels all include
large, apartment style suites with fully equipped kitchens and complimentary wi-
fi. We remain longer. Save more money. We’re the ideal destination to stay for a
day, a week, a month or longer because of our discount. You can stay for eternity
as well.

1.2 Company History

Deal Squard Private Limited is an unlisted private company and is incorporated
on 24th November, 2021. It is classified as a private limited company and is
located in Ghaziabad, Uttar Pradesh. Its authorized share capital is INR ₹1.00 lac
and the total paid-up capital is INR ₹1.00 lac.
Deal Squard, a family of brands where genuine care is always there. The director
of the Deal Squard company is Shobhit Maheshwari.

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Deal Squard Private Limited is a Non-Government Company and its’ registered/
active address is 2nd Floor, Office No. 249 Phase 1 Cloud 9 Tower, Vaishali
Ghaziabad (Delhi NCR), 201019.
1.3 Vision
Deal Squard believe in an accommodation service that aims to redefine luxury
stay with easy-on-wallet stay options. We believe that travel is more than reaching
one’s destination, which is why, we aim to provide comfortable, convenient, and
cost-effective accommodation options across diverse locations in India.
1.4 Mission
Deal Squard is an accommodation service that offers comfortable, convenient,
and cost-effective stay options across India. Their mission is to make your stay
easier than ever, and to help you stay affordable, productive, relaxed, and longer.
1.5 Range of Services
Deal Squard deals in both B2B and B2C

➢ What do they offer in B2B?

• They offer best segment prices for two-star, three star and Five Star hotels.
• Also offer hassle free, early check in, best price guaranteed
• Has the special deals in Delhi, Noida and Ghaziabad area.
Special deals with Delhi, Noida, and Ghaziabad’s leading hotels- and we share
these savings with you.
Arly Check-ins. “Reaching Early? Select from a wide range of hotels allowing
you to check in early”. Exclusive Benefits. No More Waiting.
➢ What do they offer in B2C?
• They offer 1150+ magazines
• “Daily Updates” and “Daily Updated Newspaper” (in Hindi and English)
• Access to premium stories Flexible price according to the consumer’s
needs.

1.6 Company’s Target

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 Target

B2B B2C

(Business to Business) (Business to Customers)

Business Clients look for special Students with a keen interest in

deals in areas like Delhi Noida & learning.
Ghaziabad
Clients who want extra features People who want to stay up to date
like early check-in. with their surrounding ecosystem
Business Clients who want Consumers who want to know
affordable prices for two-three and about specific genres.
five-star hotels

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 CHAPTER 2
INTRODUCTION

5|Page
 Introduction

2.1 Introduction to Hospitality Sector

The industry that is expanding the quickest right now is hospitality. The hospitality
industry has expanded due in large part to the travel and tourist industry. The essence
of hospitality is providing warmth to a stranger or an unfamiliar person in need of
assistance. It describes the procedure for welcoming and amusing a guest who presents
a positive image. In the business world, hospitality refers to the services provided by
lodging facilities, eateries, cafés, and nightclubs that specialize in hosting visitors. A
hotel's operating factors might determine its classification into many classes or
categories.
A hotel can be classified into different categories or classes, based on their operational
criteria. For example, the type of boarding they provide, location of the property, types
of services provide, facilities given and the clientele they carter to can help categories
hotels today.

2.2 Goods and Service tax (GST)

Tax (GST) which has replaced the different types of Indirect Tax in India. And on 29th
March, 2017, the Goods and Services Tax Act was introduced. This Goods and Services
Tax (GST) law in India is a destination-based, multi-stage, comprehensive tax that went
into force on July 1, 2017, and it is imposed on all value additions. GST is, to put it
another way, an indirect tax to imposed on the provision of goods and services. There
are several indirect taxes, that were formerly in force in India have been replaced by
this statute. One of the indirect taxes that applies nationwide is the GST.
Fig. 1 So, before the GST, the pattern of tax levy was as follows:

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Central Government levied taxes on the following:
• Income tax: Tax collected on the income of an individual
• Customs Duties: Duties collected on the exports and imports of goods
• Service Tax: Tax gathered on various services
• Central excise Tax: Taxes on manufacturing of dutiable goods.
State Government levied the following taxes:
• Value Added Tax (VAT): Sales of goods involve a particular tax. The sales of
the goods in intrastate are covered by the VAT Law of the state, whereas those
among the interstate is levied by the Central Sales Tax Act. Even the revenue
gathered as per the Central Sales Tax Act is done by the State by Government
and the Central Government has no role in it.
• Stamp Duties and Land Revenue: Since land is a matter on which only the
State Governments can govern, thus the Stamp duties on transfer of immovable
properties are levied by the State Government.
Post GST Structure

Under the new tax regime, there will be three kinds of Goods and
Services Tax:
• CGST: CGST is where the revenue/tax will be collected only by the Central
Government
• SGST: SGST is where the State government will collect the revenue/tax for
intra-state sales.
• IGST: IGST is where the country’s central government will collect
revenue/tax will for interstate sales.

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2.3 History of GST
Fig.2 History

(source: cleartax.in)
Fig 3. Tax Structure

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In most cases, the tax structure under the new regime will be as follows:
Table 1: Tax Structure
Transaction New Regime Old Regime
Sales within the CGST+SGST VAT+ Central Revenue will be shared
State Excise/ Service equally between the
Tax Centre and the Sate

Sales to another IGST Central Sales There will only be one

State Tax+ type of Tax (central) in
Excise/Service case of inter-state sales.
Tax The Center will then
share the IGST revenue
based on the destination
of goods.

2.4 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 regime. The tax structure in India comprises of two taxes
Direct Taxes and Indirect Taxes. Direct Tax includes the income tax, corporate
tax and wealth tax. Indirect Tax includes Exercise Duty, Custom Duty, service
tax, VAT. Progressive Tax increases the rates 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 production.
Figure 4: Before and After GST

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2.5 Financial Impact of GST on Hospitality Industry
According to report, The India Online Accommodation Market size is estimated
at USD 8.12 billion in 2024, and is expected to reach USD 13.23 billion by 2029,
growing at a CAGR of 10.25% during the forecast period (2024-2029).
The statistic shows that the Indian Hotel Industry is one of the fastest growing
sectors to 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 of end users. On the other hand, the complicated compliance
structure is being frowned upon.
Although the unified tax regime may have the 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 Hospitality Sector is overall positive, as which reduced end
user’s costs, the industry will likely attract more customers and tourists.
Additionally, the regime is expected to improve governments revenue. It will
have long term positive impact and the tax structure will be further simplified for
end customers as well as hotels.

2.6 Purpose of the study:

Following are the purpose of the study:
• To do a comprehensive analysis of the GST on the Hospitality Sector.
• To study the Tax Structure implied before the introduction of the GST on
the Hotel Industry
• To study the need for GST in India
• To analyze the financial statements of the hotels before and after GST.
• To analyze the both positive and negative impact of GST on the
Hospitality Sector.
• To study the Union Budget with the GST implications.

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2.7 Learning from the Internship:
• Understanding the practical exposure to how GST works in real-life
• Understand the importance of Time Management while working on
Existing deals
• Understand the knowledge of the Team Leading.
• Learn how to communicate effectively, introduce yourself and build
relationships with colleagues, mentors and industry experts.

2.8 Research Methodology

• The data research is primary & secondary in nature
• The entire report is based upon the Qualitative and quantitative research
method, which includes Secondary reports taken from various sources
like websites and articles. National & International Journals, government
reports, and websites which focused on the various aspects of Goods and
Services tax on the hotel industry in India and conducted a survey
(primary data) within the company

2.9 Limitations of the Study

• Working on a specific sector will limit the knowledge only to that sector.
• The data is historical in nature
• The study faces limitations in assessing the long-term impact of GST on
the hospitality sector due to time constraints.

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CHAPTER 3
INDUSTRY
ANALYSIS

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3.1 Industry Analysis

The hospitality industry is a vast business sector that encompasses all economic and
business activities related to travel and tourism. It serves as a crucial support system
for travelers and tourists, offering essential services that enable their journeys and
this sector also encompasses a diverse range of industries focused on providing
accommodation, dining, entertainment, and leisure services to guests and travelers.
It includes businesses such as hotels, restaurants, resorts, theme parks, cruise lines,
and event management companies. The hospitality sector plays an important and
crucial role in facilitating tourism, business travel, and social gatherings,
contributing to economic growth and cultural exchange worldwide.

Fig.5 (Source: Renub.com)

Fig.6 (Source: Ibef.com)

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The travel and tourism(T&T) market in India is projected to reach nearly about
US$ 125 billion by the Financial Year FY27 from an estimated about US$ 75
billion in Financial year FY20. The Indian airline travel market was to be
estimated at US 20 billion dollar and is projected to double in size by the FY27
due to improving airport infrastructure and growing access to passports. Also, the
Indian hotel market including domestic, inbound, and outbound was estimated at
~US$ 32 billion in FY20 and is expected to reach US$ 52 billion by FY27, driven
by the surging demand from travelers and sustained efforts of travel agents to
boost the market. Cumulative FDI equity inflow in the Hotel and Tourism
industry is US$ 17.29 billion during the period April 2000-September 2023. This
constitutes 2.60% of the total FDI inflow received across sectors.

3.2 Sector Classification

The hospitality sector comprises a diverse array of industries dedicated to meeting
the needs of travelers and guests, offering a range of services spanning
accommodation, dining, entertainment, and transportation. At the heart of this
sector lies accommodation, with hotels, motels, resorts, and vacation rentals
providing lodging options to suit various preferences and budgets.
Complementing accommodation services, the food and beverage sector offers a
plethora of dining experiences, from fine dining restaurants to food trucks and
casual cafes, catering to diverse culinary tastes. Travel and tourism businesses
play a pivotal role in facilitating travel arrangements and providing memorable
tourism experiences, including travel agencies, airlines, tour operators, and tourist
attractions. Meanwhile, entertainment and recreation establishments offer leisure
and entertainment options such as theme parks, cinemas, live music venues, and
sports arenas, contributing to the vibrant hospitality landscape. Together, these
diverse industries form the backbone of the hospitality sector, playing a crucial
role in shaping memorable experiences for travelers and guests around the world.

Table 2. Hospitality Sector Classification

Sectors Description
Hotels Accommodation establishment offering lodging services
to travelers and guests

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Travel and Businesses involved in fascinating travel arrangements
Tourism and tourism experiences for individuals
Food and Establishments offering dinning and beverage services to
Beverage customers.
Entertainment Business providing leisure and entertainment experiences
to consumers.
Transportation Services involved in providing transportation to travelers
Spa and Wellness Facilities offering spa, wellness and fitness services
Events and Business organizing and hosting events, conferences,
Conferences meetings and exhibition.

Table 3. Market size of the hospitality industry

Year Market Size (in billion US $)
2023 4699.6
2027 5816.7

Fig 7. (source: www.statista.com)

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3.3 What are the driving factors for the Growth of the Hospitality Market

• Global Diversity: One of the market's main forces is its worldwide scope,
which is shown in its wide range of applications and kinds. There may be
distinct trends and desires in various markets and geographical areas.
• Product Innovation: Market expansion can be fueled by continuous
product innovation and development. Improved and new goods have the
power to grow markets and draw customers.
• Market Segmentation: Companies can target particular niches and
perhaps increase their market share and profitability by taking advantage
of the market's segmentation into different types and applications.
• Long-Term Growth Perspective: By emphasizing growth estimates for a
wide time frame (2023–2030), this approach implies a long-term outlook
that affects investments and strategic choices.
• Market Dynamics: The expansion of the keyword market can be
dynamically impacted by a number of factors, including consumer
preferences, prevailing economic situations, and technology
breakthroughs.
• Long-Term Growth Perspective: By emphasizing growth estimates for a
wide time frame (2023–2030), this approach implies a long-term outlook
that affects investments and strategic choices.
• Market Dynamics: The expansion of the keyword market can be
dynamically impacted by a number of factors, including consumer
preferences, prevailing economic situations, and technology
breakthroughs.
• Regulatory Environment: Modifications to laws pertaining to a particular
product category may have an impact on market dynamics and present
chances or difficulties for companies that operate in that market to thrive.
• Competitive Landscape: The existence of rivals and their tactics in the
keyword market can spur innovation and affect the rates of market
expansion.
• Consumer Demand: Fluctuations in consumer demand for different
product types and categories play a crucial role in shaping market trends
and growth prospects.

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3.4 SWOT Analysis of Hospitality Sector

• Strengths
o Growing Demand: The sector experiences robust demand due to
tourism, business travel and events.
o Diverse Offerings: Hotels, resorts, restaurants and event venues
cater to various needs.
o Service Excellence: Focused on guest satisfaction and personalized
service
• Weakness
o High Operating Costs: Maintenance, staff salaries and utilities
contribute to expenses
o Seasonal fluctuations: Demand varies based on seasons and events
o Dependency on external factors: Economic conditions, political
stability, and natural disasters impact the industry
• Opportunities
o Technology Integration: Adopting digital solutions for bookings,
guest management and marketing
o Eco friendly practices: Sustainable initiatives attracts
environmentally conscious travelers.
o Culinary Experiences: Offering unique dining experiences
• Threats:
o Completion: Intense rivalry among hotels and alternative
accommodations
o Regulatory Changes: Tax policies, safety regulations, and licensing
requirements.
o Global Events: Pandemic, geopolitical tensions and economic
downturns affect travel patterns.

3.5 Hospitality and Tourism under Pre-GST Regime

The hospitality industry, like every other sector/industry in the Indian economy,
was liable to pay the multiple taxes to the government (VAT, luxury tax, and
service tax and more) under the previous VAT regime. Under the VAT regime,
the hotel sector, like every other sector in the Indian economy, was required to

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pay several taxes, including service tax, luxury tax, and VAT. A hotel would be
subject to 15% service tax if the room rate surpassed ₹1000.

The tariff value was subject to be a 40% abatement, which resulted in a 9%

effective service tax rate. In addition, there would be the Value Added Tax (which
varies from 12% to 14.5%) and Luxury Tax to pay.

With the exception of VAT (12% to 14.5%), which was charged at an effective
rate of 6% on F&B bills, restaurants were subject to a 60% abatement. Bills for
bundled services, such as marriages and lectures, were subject to a 30% tax
abatement.

The final cost increased due to the cascading impact of the VAT regime, where
the consumer ultimately paid a tax on tax. Because central taxes: such as service
tax, could not be off-set against state taxes (VAT) or vice versa, hoteliers and
other hospitality-related enterprises were not eligible for an input tax credit on
the taxes they paid.

3.6 Hospitality and Tourism under GST regime

Under the Goods and Service Tax, the hospitality sector stands to reap the benefits
of standardized and uniform tax rates and easy and better utilization of input tax
credits. As the final cost to the end user decreases, the industry attracts more
overseas tourists than before.
This ideally results in improved revenues for the government, and there are many
pros to this new tax regime which could help the industry’s growth in the long
run. For instance, complementary food (like breakfast) was taxed separately
under VAT, but now it will be taxed under GST as a bundled service

3.7 What are the Best Practices for the Hospitality Industry to Manage
compliance requirement Under the GST?
Managing compliance requirements under GST is important for the hospitality
industry for several reasons. Firstly, it is a legal requirement, and non-compliance
can result in penalties, fines, and legal consequences. Secondly, the hospitality
industry can avail input tax credits for taxes paid on inputs, which can
significantly reduce the tax burden. Proper compliance is necessary to claim these
credits. Additionally, compliance with GST laws and regulations helps establish
transparency and credibility in the business dealings of the hospitality industry. It

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also helps avoid disputes and legal issues that may arise from incorrect tax
calculation and payment.
Proper compliance with GST laws and regulations can result in cost savings for
the hospitality industry, as it ensures that the correct amount of tax is being paid
and the right input tax credits are being claimed. In summary, managing
compliance requirements under GST is crucial for the hospitality industry to
comply with the law, reduce tax burden, establish credibility, avoid disputes, and
save costs.
Some of the best practices for the hospitality industry to manage the
compliance requirements under GST are:
1. Keep detailed records: Maintaining proper and accurate records of all
transactions is crucial for GST compliance.
2. Proper classification of goods and services(G&S): Proper classification
of goods and services is important to determine the correct rate of GST.
3. Timely filing of returns: Regular and timely filing of GST returns is
essential to avoid penalties and legal consequences.
4. Proper invoice management: Proper invoice management and issuance
is important to avoid any disputes and to claim input tax credits.
5. Employee training: Employees should be trained on GST rules and
regulations to ensure compliance at all levels.
6. Staying updated: The hospitality industry should stay updated on changes
in GST laws and regulations.
7. Availing input tax credits: Availing input tax credits is a key aspect of
GST compliance, and the hospitality industry should ensure that all eligible
credits are claimed.
8. Working with a GST expert: Working with a GST expert or consultant
can help the hospitality industry navigate the compliance requirements and
ensure a smooth GST compliance process.

Table 4. Hospitality Companies Classification according to hotels:

Indian Hospitality Market Leader
S. No Hotels
1. Oberoi Hotels and resort
2. The Park Hotel

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 3. ITC Hotels
4. Lemon tree
5. Taj Hotels

The Hospitality Industry in India whose Market size is estimated at US $24.61

billion in 2024, and is expected to reach US $31.01 billion by 2029, is growing
at a Compound Annual Growth Rate CAGR of 4.73% during the forecast period
of 2024-2029. The hospitality industry in India has been a scoring a moderate
growth number in the past few years and has a great potential to score an even
greater number in the near future, the nation that is rich in culture and diversity
that has been attracting a large number of tourists from all over the world. India
is also been recognized as a destination for spiritual tourism for the international
and domestic tourists.

Table 5: Hotels Listed on the stock exchanges (BSE &NSE)

S No Hotels Listed
1. EIH Ltd.
2. The Leela Group
3. Lemon Tree Hotels
4. Indian Hotels Co Ltd
5. Taj GVK Hotels & Resorts

3.8 What is a hotel?

A hotel is an establishment that provide a paid logging on a short-term basis.

Provide basic accommodation, with modern facilities like a small home. Provides
customer satisfaction, comfortability and friendliness.
3.9 Classification of Hotels?
Hotel can be classified into different categories or classes based on their
operational criteria. For example, type of location of the building or property,
types of services that are provided, the type of accommodation they provide.
Hotels today basically classified into the following categories:

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 Fig 8. (source: hospitality-school.com)

1. Market Segment

a. Economy Hotel: It provides efficient sanity private rooms with

bath. The furnishing and décor area are acceptable to majority of
travelers, Food and beverage service may or may not be available.
b. Mid- Market Hotel: they offer comfortable accommodation with
private on-premise bath. Beverage and food services are uniformed.
They offer above average luxury
c. First class Hotels: They are the luxurious hotel along with
exceptional décor and are better than average food and beverage,
uniformed bell services. They often have the 2 or 3 dining rooms, a
gym and spa along with swimming pool.
d. Deluxe Hotels: they are better and offer more specialized service
than first class hotels. They provide all the basic amenity and also
provide limousine services.

2. Property type:

a. Small hotels: with 100 rooms or less

b. Medium size hotel: with 100-300 rooms
c. Large size hotel: more than 300 rooms
d. Mega Hotels: with more than 1000 rooms

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 e. Chain hotels: hotels in many numbers of locations in India and
International
f. Traditional Hotels: These are the hotels that have the basic concept
of rooms with breakfast, bell desk and the other usual services.
g. Motels: These are the hotels that are located on the highways. Guest
is also given the parking rights outside their rooms. They also have
the gestations attached to the hotels
h. Resident Hotels: Where guests are stayed for longer period like
stays for a week, months or even for the year.
i. Casino Hotels: These are the hotels usually in tourist spots and
mainly cater to people who are on holidays.

3. According to the size:

a. Small Hotels (150 room)

b. Medim hotels (up to 299 rooms)
c. Large Hotels (up to 600 rooms)
d. Extra Large hotels (up to 1000 rooms)

4. Level of Services:

a. World Class service: They target top business executives and

provides services that cater to the needs of such people like laptops
in the rooms, business center etc.
b. Mid-Range Service: They appeal to the larger segment of travelling
public. The service provided by the hotels are moderate and
sufficient to budgeted travelers.
c. Economy service hotels: They provide comfortable and
inexpensive rooms and that meet the basic requirement of the guests.
These hostels may be large of small in size depending on the kind of
the business they get.

5. Ownership and Affiliations:

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 a. Independent Hotels: They have no applications with other
properties, they have their own management and they are single
properties with one owner.
b. Franchisee Hotels: The franchise grants the entities which gives the
right to conduct business provided they follow the established
pattern of the franchise, maintains their standard, level of services,
practice their policies and procedures.
c. Chain Hotels: They impose certain minimum standards, Chain
hotels usually have the corporate offices that monitor all their
properties and, one management run these properties. That is all the
hotels are under the chain are completely owned and run my chain
itself.

6. Pricing plans:

a. European Plan: room charges only

b. American plan: room + all meals
c. Modified American plan: room + breakfast + lunch / dinner
d. Continental Plan: room+ continental breakfast
e. Bed and Breakfast: room + English breakfast

7. Facilities offered:

a. Star offered
b. Dulux Hotels
c. Budget Hotels
d. Bed & Breakfast

• Awarding’s of Class:
Awarding of class is done by the (Hotel and restaurant approval &
classification committee) HRACC in India. These are the few things listed
down that are taken into considerations while awarding and according the
star categories to any hotel. Number and types of rooms the hotel has a
vital role in this. The factor which affects this are as the follow:

❖ Room efficiency
❖ Number of restaurants

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 ❖ Staff size and specialization
❖ Bars and Beverage services
❖ Spa and swimming pool services etc.

Star Classification
Table 6. Star categories of hotels in India:
Category Star
One Star *
Two stars **
Three Star ***
Four Star ****
Five Star *****
Five Star Deluxe ***** Deluxe

• One Star: One star is typically, smaller hotels managed by the proprietor.
The hotel is often having a more personal atmosphere and it is usually
located near affordable attractions, major intersection and convenient to
public transportation. Furnishing and facilities are mostly clean but basic
and most will not a restaurant on site but usually within the walking
distance to some good low-priced dinning.
i. The hotel should have at least 10 lettable bedrooms, in which at least
25% should have attached bathrooms.
ii. At least 25% of the bathrooms should have the western styles WCs
iii. Receptions counter with a telephone and a telephone for the use of
the guests and visitors.

• Two Star: Two stars usually denote independent and brand hotels chain
with a reputation for offering consistent quality amenities, and the hotel is
generally small to medium-sized and is conveniently located to moderately
priced attractions. The facilities typically include telephones and TVs in
the bedroom, and some hotels offer limited restaurant service. Somehow
room services and bell services are not usually provided.

24 | P a g e
 i. The hotel should have at least ten lettable bedrooms and of which at
least 75% should have attached bathrooms and showers with the
bathrooms for every four of the remaining rooms.
ii. 25% of the rooms should be Air Conditioned
iii. Laundry and day cleaning services
iv. Telephone in each room if the room doesn’t have a telephone each.

• Three Star: Three-star hotels offer spacious accommodations that include

well-appointed rooms, decorated lobbies. Bell desk service is generally not
available in the hotels. They are often located near major express ways or
business areas i.e. 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 (GYM), pools are often provided.
i. The hotel should have at least twenty lettable bedrooms of which all
should have attached bathrooms and showers/tubs

ii. At least 50% of room should be Air conditioned

iii. Good quality Indian and continental foods
iv. Telephone in each room and one for the use of visitors.

v. Senior staff must prosses a good knowledge of English.

• Four Star hotels: Mostly large formal hotels with receptions area, front
desk service and bell desk service. The hotel is usually located near
shopping, dining, and other major attractions. The level of services is well
above average. And the room are well lit and well furnished. Restaurants
and dinning are usually available and is having more than one choice. Some
properties well offer continental breakfasts and/ or happy hour delicacies.
Room service is usually available during most hours. Valet-parking, Gym,
pools are also offered.
i. The hotel should have at least 25 lettable bedrooms of which all
should have attached bathrooms and showers/tubs
ii. Should have a recognized travel agency, book stall, safe deposit
facilities, left luggage etc.

• Five Star hotel: These are the hotels that offers only the highest level of
accommodations and services. The property offers a high degree of
personal service. Although most five-star hotels are large properties,
sometimes the small independent property offer an elegant intimacy that
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 cannot be achieved in large settings. The hotel location can vary from the
exclusive location of suburban area to heart of the city. The hotel lobbies
are sumptuous, the rooms complete with stylish furnishing and high-
quality linen. The amenities often include DVD players, Jacuzzis and more.
The hotel features up to three restaurants with exquisite menus. Rooms
service is also available for 24 hours a day. Fitness centers and valet
parking are typically available.
i. Adequate parking space for cars.
ii. Hotels must have 25 lettable; rooms with modern showers chambers
iii. 24 hours receptions, cash and information centers
iv. All the guest areas are should be well Air Conditioned.

3.10 IMPACT of GST on Hotel Industry

Hospitality plays a major role is the hotels industry. The hotel industry plays a
vast role in the development of the services sector. Tourism and hotels pave the
way for the development of foreign currency in the country. Tourist from various
countries traveling throughout the world wants to stay and enjoy the whole day.
Industry sources said that the average combined tax rate is in the range of 18% -
22%. Under the new GST, if we stay in dining at 5 star it is more expensive.
However, the budget hotels have been classified with room rates of less than Rs
1000/-is nil, between (Rs 1000 to Rs 2500) is 12%, (Rs 2500 to Rs 5000) is 18%,
and above Rs 5000 is 28%.
The hospitality and tourism industry in India is expected to increase from ₹15.24
lakh crore (US$ 234.03 billion) in 2017 to ₹32.05 lakh crore (US$ 492.21 billion)
by the year 2028 and the implementation and improvement of GST has helped
the hospitality sector by reducing costs for customers, harmonizing taxes, and
reducing business transaction costs, but has its own set of challenges. In this
study, we will look at the effects of the GST on the hospitality industry i.e.
HOTEL Industry.

26 | P a g e
Table 7. TAX on Hotels and Accommodations
Room Rent per day 18.07.2022 1.10.2019 to 01.07.2017 to
Onwards 17.07.2022 30.09.2019
₹ 0 - ₹ 1000 Exempt Exempt
₹ 1001 - ₹ 2500
₹ 2501- ₹ 5000 12% 12% 12%
₹ 5000 – ₹ 7500 18%
₹ 7500 onwards 18% 18% 28%

The above table shows that the Under the GST regime, hotels and the restaurants
are charged separately. Hotels will be charged with different rates depending on
the value of tariff they are going to charge per night. Hotels with tariff less than
Rs.1000 will not charge any GST. But hotels with more than Rs.1000 tariff and
less than Rs.2500 per night are subject to charge GST at 12%. Hotels having
tariffs between Rs.2500 and Rs. 7500 per night are subject to charge GST at 18%.
Whereas five-star category hotels with tariffs more than Rs. 7500 per night are
liable to charge GST at 28%.

3.11 HOW HAS GST AFFECTED THE COMPETITION WITHIN THE

HOTEL INDUSTRY?
The GST has both positive and negative impacts on the competition within the
hotel industry in India.
Positive impacts:
1. Level playing field: The GST has brought about a level playing field for
the hotel industry by removing the cascading effect of taxes and
simplifying the tax system. This has made it easier for smaller hotels to
compete with larger hotels by reducing their tax burden.
2. Easier to expand operations: The GST has made it easier for hotels to
expand their operations across state borders, as they no longer need to deal
with different tax systems in different states. This can be particularly
beneficial for hotels that are looking to expand their operations in multiple
states.
3. Improved competitiveness: The GST has made it easier for hotels to be
more competitive by reducing their tax burden and improving them

27 | P a g e
 operations. This can be particularly beneficial for smaller hotels that are
looking to expand their operations.

Negative impacts:
1. Increased tax burden: The GST has increased the tax burden for hotels,
which can make it difficult for small and medium-sized hotels to compete
with larger hotels that have more resources to bear the additional costs.
2. Complicated compliance requirements: The GST compliance
requirements can be complex, and hotels may need to invest in resources
and manpower to ensure compliance. This can be particularly challenging
for the small and medium-sized hotels.

GST Collection from Hotel and Restaurant Services

Fig 8 (Source: https://gstcouncil.gov.in/)

3.12 Pros and Cons of GST on Hotel Industry

Pros
1. GST implementation reduces administrative steps and creates more
opportunities to streamline the taxation of the economy.
2. Reducing food bill taxes attracts more customers and creates revenue to
the government.
3. Small scale restaurant owners will benefit by minimum block of 0-12%
tax.
4. The new GST system will promote government revenue generation,
reduce corruption and slash restaurant business prices.

28 | P a g e
 5. The removal of a lot of entries from the accounts book under name of
various taxes leads to faster processing of a transaction.
Cons
1. Though the bill has been introduced by the government there is a great
deal of ambiguity on its implementation. The government should provide
clear guidelines on how accounts have to be compelled for maintenance
and filling of returns.
2. The tax bracket for luxury hotels is simply too wide.
3. Small hotels need skilled assistants to work on GST. They have to bear
extra charges for hiring specialist or training the old one.

3.13 Tourism and Travel

India's Prime Minister, Narendra Modi, officially led the nation into the era of GST,
or "One Nation One Tax," on June 30, 2016, at midnight. Since the GST is an
impartial tax system, its effects are seen in every industry. The impact of GST was
also felt by the Indian tourism sector, which was valued at US$ 136.2 million in
2016. The purpose of Endeavor in this article is to draw attention to the effects of
GST on India's travel and tourism sector.
How things were Pre-GST for Tourism Sector?
Before GST was rolled out, the tourism industry was liable to pay multiple taxes
(VAT, luxury tax, and service tax). Let's use a hotel with room rates more than INR
1000 as an example. This hotel was required to impose a 15% service tax.
However, because the laws under the VAT regime provided a 40% tariff value
abatement, the effective rate of service tax was reduced to 9%. On top of this, the
Value Added Tax (12–14.5%) and Luxury Tax were imposed.
With the exception of VAT (12–14.5%), a 60% abatement for restaurants reduced the
effective rate of interest on F&B bills to 6%.
How things are under GST for Tourism Sector?
The Indian tourist business, which operates under the motto "Atithi Devo Bhava"
(which means "the guest is equivalent to God"), was anticipated to benefit greatly
from the new GST regime. The final cost for the end-user was thought to be lower
because of uniform tax rates and improved utilization of the input tax credit, which
in turn would draw in more foreign visitors.

29 | P a g e
But the ambiguity and misunderstanding around GST has made things difficult for
customers who are making hotel reservations during the busiest travel seasons.
Government guidelines state that hotels may impose a 28% GST on rates that are
declared to be at least Rs 7,500. However, hotel owners clarified that because room
rates fluctuate with the seasons, the declared tariff was ambiguous and imprecise.
Hotels may introduce new rates multiple times a year, contingent on the number of
guests. As a result, the term is misinterpreted and causes misunderstanding among
tourists.
However, it could be understood that hotels depend on tourist seasons for good
business, hence the invoice value should be considered for calculating the GST rate
in hotels. The tax slabs appear to create confusion among customers and the solution
ahead as suggested by experts is to charge taxes on invoice or transaction value rather
than the declared tariffs.

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 CHAPTER 4
RESEARCH
METHODOLOGY

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4.1 Title of the project:
• “Impact of the GST on Hospitality Sector”

4.2 Objective
• The present study on GST is focus on hospitality sector particularly Hotel
Industry
• To analyze the financial statement of hotels before and after GST
• To study and analyze the impact of GST on hospitality sector
• To study the tax structure implied before introduction of GST on hotel
Industry

4.3 Collection of data/ Methodology

The methods of any research are in a way the methods of data collection. The
sources of information fall under two categories:
a) Primary Data
b) Secondary Data

Primary
Data Questionnaire

Secondary Annual Reports

Data Websites

In this project I worked on both primary and secondary data.

The data which is collected using primary and secondary data. The sample size
was 28. The primary data was collected through a questionnaire and Secondary

32 | P a g e
data was obtained from the annual reports, organization websites and past
records. The Statistical tools used for the research are:
• Ratio Analysis
• Trend Analysis

4.4 Limitations of the Data

• Working on a specific sector will limit the knowledge only to that sector.
• The calculations involve only historical data.
• The study faces limitations in assessing the long-term impact of GST on
the hospitality sector due to time constraints.
• To summarize the vast data in short, simple & presentable form
• Lack of resources
• Limited information of GST on the financial statements
• Confidential of the primary data.
• Small sample size, so the results may not be representative of the wider
population.

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 CHAPTER 5
ANALYSIS &
INTERPRETATION

34 | P a g e
India’s Goods and Service 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 rate and
possible available credits, you can reduce your tax liability and keep customers
happy with lower prices.
Before the Indian Government instituted the 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 etc. With multiple taxes, hotels owners also
faced complicated paperwork when it came time to file tax returns.

5.1 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 tariffs over Rs. 7500 and
➢ 18% tax on rooms with tariffs between Rs 2500 and Rs 7500

C. After New Union Budget

(5th July 2019 till Present)

➢ The GST rate for room tariffs of Rs 7500 and above was reduced to 18%.
➢ 28% rate between Rs 1000 and Rs 7500 would have to pay 12%.

5.2 Analysis of the Pre and Post GST

35 | P a g e
After Introduction of the GST
BILL Pre GST Pre GST >5000 Post GST Post GST
<5000 <7500 >7500
Bill total 4000 10000 4000 10000
before tax
Luxury NA 1000 NA NA
Charge @10%
Service Tax 100 250 NA NA
@2.5%
Swachh 8 20 NA NA
Bharat cess
@0.2%
Krishi Kalyan 8 20 NA NA
cess @0.22
VAT @8.40% 336 1450 NA NA
@28%
GST @18% NA NA 720 2800
@28%
Total After 4452 12740 4720 12800
Tax

After New Union Budget:

BILL Pre GST Pre GST Post GST Post GST
<5000 >5000 <7500 >7500
Bill total 4000 10000 4000 10000
before tax
Luxury NA 1000 NA NA
Charge
@10%
Service Tax 100 250 NA NA
@2.5%
Swachh 8 20 NA NA
Bharat cess
@0.2%
Krishi Kalyan 8 20 NA NA
cess @0.22
VAT @8.40% 336 1450 NA NA
@28%
GST @18% NA NA 480 1800
@28%
Total After 4452 12740 4480 11800
Tax

36 | P a g e
Analysis of the 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 tariffs over Rs. 7500 and 18% tax on rooms with tariffs
between Rs 2500 and Rs 7500. In comparison VAT has 12% tax on room tariffs
below Rs 5000 and 18% above 5000.

5.3 Likely Impact in GST regime on hotel after new Budget:

Based on the latest revised Union Budget released on 5th July 2019 till present 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 7500 and above was reduced to 18% from
28%, while those between Rs 1000 - Rs 7500 would have to pay 12%
Hotels with tariffs of less than Rs 1000 do not attract tax as per an earlier decision.
Earlier the slab of Rs 2500-7500 attracted 18% tax.
New GST rates is lesser than earlier rates are 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.

5.4 Impact on Restaurant/ Cafeteria under GST Regime.

For hotels with restaurants, the GST rules are:
• If your hotel is started, and your rates are ₹7500 and higher, you must
charge restaurant customers a GST of 18%
• If your hotel does not meet both of these conditions, you can charge hotel
restaurant customers a GST of 5% which means your guest food bills will
be lower.
After new Union Budget of India-
Pre and Post GST
37 | P a g e
 (source: www.voolsy.com)

As of Union Budget 1 July 2019

(source: inshorts)
38 | P a g e
Analysis of the Restaurant Bill
Under the GST, the food sector has become affordable with lower tax slab and
input is given by government to promote tourism industry.
As an end customer, we hardly pay attention to our food bills in these restaurant’s
and most of us are not even aware of the components included in it.
If you revisit your food bills from the Pre GST fine dine experience, you will find
the Service Tax, Service Charge, VAT being added over and above the food value.
First let us understand the components of the bills:
• VAT: This is the tax charged on the food portion of your bill.
• Service Tax: This is the tax charged on the service provided by the
restaurants
• Service Charge: Thus, charged is applied by the restaurant’s not by the
government. This is not a tax. It should not be confused with service tax as
this is an income to the hotels. Service tax is not an income and merely a
tax collected from you and submitted to the government.

5.5 Effect on restaurant owners

Your hotel restaurants tax rate also affects whether you claim the ITC. If you fall
into the 18% bracket you are allowed to use the ITC for all the goods you
purchase to use in your restaurants. That provides some relief for luxury hotels,
which have been hit by the hardest GST. It’s also good news for your diners,
because you can pass on the savings through lower prices. If your hotel restaurant
falls into the 5% bracket, you cannot claim ITC. These new rules were
announced in February 2018. For many hotel owners, the GST is largely positive.
As businesses and the government adjust to the new tax regime, it's a good idea
to keep an eye on tax rates and credits to ensure you're getting the biggest possible
benefit.
Companies specializing in food and beverages operations could be the biggest
beneficiaries of GST within the hospitality sector. Food and beverages bills have
multiple components and can inflate the bills by 30-35%. A single-slab tax will
benefit consumers and should lead to savings of 10-15% on the overall bill.

39 | P a g e
5.6 Analysis of EIH Limited

Introduction
EIH Limited is the flagship company of the Oberoi Group, one of the largest
luxury hotel chains in India. We operate hotels under the three renowned names
of Oberoi, Trident, and Maidens. Our personalized service, commitment to
excellence, and attention to detail have won us loyal customers and recognition
from the global hospitality industry1. With 4,935 rooms across hotels in 24 cities
across India and 7 countries, we continue to provide luxury and service par
excellence1. Additionally, we are extremely passionate about incorporating the
best practices of corporate social responsibility into our business1. Beyond hotels,
we also have other businesses across the luxury hospitality value chain, including
Oberoi Flight Services (a catering service provider to leading international
airlines) and Avis India (a car rental business in collaboration with Mercury Car
Rentals Private Limited, where EIH holds 40% equity interest).
Its share price is about:
• NSE: ₹486.1
• BSE: ₹491.1
Hotel Brands:
EIH operates hotels under three renowned names:
Oberoi: Known for exquisite dining experiences and bespoke opulence.
Trident: Offers luxury stays with personalized service.
Maidens: Provides unforgettable experiences for guests.

Investors:
• EIH focuses on boosting growth and strengthening market leadership.
• As of FY23, the company’s EBITDA was INR 6,256 million, and gross
fixed assets stood at INR 30,952 million.

40 | P a g e
Balance Sheet Account of EIH Limited (Pre and Post GST)
EIH Ltd. Hotel (Pre-GST)
As at 31st March 2023 As at 31st March 2022 As at 31st March 2018 As at 31st March 2017
S. No Assets
A Non Current Assets
Property, plant and equipment 17,407.82 17,621.95 20,120.68 15,591.12
Right-of-use assets 3,791.88 3,557.64 -
Capital work-in-progress 859.87 420.48 1,340.83 3,134.36
Investment properties 1,006.58 1,032.70 -
Intangible assets 40.4 48.9 87.34 88.51
Intangible assets under development 1.55 7.23 -
Financial assets
(i) Investments 7,098.98 7,098.87 7,630.06 7,636.80
(iii) Other financial assets 1,849.90 1,827.05 1,693.41 1,439.20
Income tax assets (net) 937.94 582.63 691.24 807.01
Other non-current assets 441.4 727.27 3,021.57 2,588.31
Total non-current assets 33,436.32 32,924.72 34,585.13 31,285.31
Current assets
Inventories 557.55 413.49 428.03 413.33
Financial assets
(i) Investments 77.13 89.39
(ii) Trade receivables 2,103.76 1,052.06 2,036.90 1,692.10
(iii) Cash and cash equivalents 320.14 530.95 45.8 67.9
(iv) Bank balances other than cash and cash equivalents 1,473.08 26.41 32.83 30.1
(vi) Other financial assets 141.15 490.28 38.07 511.89
Other current assets 423.68 663.53 656.75 790.98
Total current assets 5,096.49 3,266.11 3,238.38 3,506.30
Assets classified as held for sale/transfer - 42.63 -
Total assets 38,532.81 36,233.46 37,823.51 34,791.61
Equity and liabilities
Equity
Equity share capital 1,250.73 1,250.73 1,143.14 1,143.14
Other equity 29,930.83 26,831.56 27,015.53 26,538.42
Total equity 31,181.56 28,082.29 28,158.67 27,681.56
Liabilities
Non-current liabilities
Financial liabilities
(i) Borrowings 359.85 1,647.44 2,537.18 1,519.41
(i) Lease liabilities 1,517.44 1,171.15 -
(ii) Other financial liabilities 77.46 86.78 28.5 25.62
Provisions 226.16 201.36 238.01 209.96
Deferred tax liabilities (net) 1,229.34 69.62 1,761.48 1,741.20
Other non-current liabilities 11.34 3.06 4.64 2.33
Total non-current liabilities 3,421.59 3,179.41 4,569.81 3,498.52
Current liabilities
Financial liabilities
(i) Borrowings 205.63 1,687.67 1,399.72 1,159.69
(i) Lease liabilities 26.82 12.29 -
(ii) Trade payables 1,607.77 1,295.12
- Total outstanding dues of micro enterprises and small enterprises 74.1 58.04
- Total outstanding dues of creditors other than micro enterprises and small
enterprises 1,942.16 1,350.99

(iii) Other financial liabilities 296.58 167.56 1,190.36 427.35

Other current liabilities 1,139.97 1,520.00 686.34 578.66
Provisions 244.4 175.21 210.84 150.71
Income tax liabilities (net)
Total current liabilities 3,929.66 4,971.76 5,095.03 3,611.53
Liabilities directly associated with assets classified as held for sale/transfer - - -
Total liabilities 7,351.25 8,151.17 9,664.84 7,110.05
Total equity and liabilities 38,532.81 36,233.46 37,823.51 34,791.61

41 | P a g e
Profit and Loss Account of EIH Limited (Pre and Post GST)

Standalone Profit and Loss Account of EIH Ltd.

(Pre-GST)
S.no Particulars Year ended March 31, 2023 Year ended March 31, 2022 Year ended March 31, 2018 Year ended March 31, 2021
A. Continuing Operations :
Revenue from operations
(a) Revenue from sale of products 17,736.66 8,608.64 13,502.79 12,775.49
(b) Other operating revenue 621.64 498.94 837.64 992.26
Total revenue from operations 18,358.30 9,107.58 14,340.43 13,767.75
Total income 18,358.30 9,107.58 13,767.75
Expenses
(a) Cost of materials consumed 1,780.36 1,255.46 1,939.44 1,917.53
(b) Purchases of stock-in-trade - - -
(c) Changes in inventories of finished goods, work-in-progress and stock-in-
trade - - -
(d) Employee benefits expense 3,825.75 3,422.12 4,043.58 3,792.93
(e) Finance costs 291.49 337.9 195.7 145.04
(f) Depreciation, impairment and amortisation expense 1,152.47 1,148.47 1,089.72 1,104.87
(g) Excise Duty 3.85 18.14
(g) Other expenses 6,496.66 4,131.19 5,329.45 5,128.51
Total expenses 13,546.73 10,295.14 12,601.74 12,107.02
Profit before exceptional items and tax from continuing operations (3-4) 4,811.57 -1,187.56 1,738.69 1,660.73
Exceptional item -445.76 -141.8 -382.22
Profit before tax from continuing operations (5+6) 4,365.81 -1,329.36 1,738.69 1,278.51
Tax expense (net)
(a) Current tax - 21.19 589.7 479.45
(b) Deferred tax 1,164.12 -168.5 26.24 -166.31
Total tax expense 1,164.12 -147.31 615.94 313.14
Profit for the year from continuing operations (7-8) 3,201.69 -1,182.05 1,122.75 965.37
Profit for the year (9+12) 3,201.69 -1,182.05 1,122.75 965.37
Other comprehensive income / (loss) for the year -102.42 7.75 -71.63 -81.38
Total comprehensive income for the year (13+14 3,099.27 -1,174.30 1,051.12 883.99
Earnings per equity share from continuing operations of face value of ₹ 2 each
Basic (in ₹) 5.12 -1.89 1.96 1.69
Diluted (in ₹) 5.12 -1.89 1.96 1.69

Analysis of the above Financial Statements

The above Financial Statement (Balance sheet and profit and loss account) shows
the financial year of 2023, 2022, 2018,2017 means before and after GST. The
above statements show the annual records of the EIH group performance with

42 | P a g e
the introduction of the GST. So, to study the financial performance of the EIH
Group (a member of the Oberoi Group) we undergone to the Ratio Analysis and
trend Analysis to see the overall performance of the company.

5.7 Analysis and Results (Secondary Data)

(a) Ratio Analysis
Ratio analysis can predict a company's future performance -for better or worse.
Successful companies typically have strong ratios in all regions, and any rapid
weak point in one area can cause a significant stock sell-off.
Following 5 ratios were chosen on the basis of most relevant to analyze the group:
1. Current Ratio:
The current ratio (CR) is a liquidity ratio that measures a company’s ability to pay
a short-term obligation (those due within one year) using its current assets. It
compares all current assets (such as cash; accounts receivable, and inventories)
to current liabilities (such as accounts payable, short-term debts, and taxes
payable).
A current ratio in line with the industry average or slightly higher is generally
considered acceptable. A lower ratio may indicate higher risk, while a very high
ratio suggests inefficient asset utilization12.
2. Cash Ratio:
The cash ratio is a liquidity ratio that shows a company’s ability to cover its’ short-
term obligation using only the cash and cash equivalents. It specifically considers
the proportion of total cash and near-cash securities to total current liabilities.
A calculation greater than 1 indicates that the company has more cash on hand
than current debts, while a calculation (<1) less than 1 suggests more short-term
debt than cash13.
3. Debt Asset Ratio:
The debt asset ratio measures the proportion of a company’s asset that are
financed by debt. It helps assess a company’s capital structure.
Funded debt includes interest-bearing liabilities (such as bonds, term loans, or
subordinated debt), excluding total liabilities like accounts payable. A higher ratio
indicates greater debt funding and potential solvency risk
4. Operating Profit Ratio (also known as Operating Profit Margin):

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The operating profit ratio establishes a relationship between operating profit
(before interest and taxes) and net revenue generated from operations (net sales).
It helps assess how efficiently a company converts revenue into profit.
A higher ratio indicates better operational efficiency, while a declining ratio may
signal operational flaws.
5. Net Profit Margin:
The net profit margin (or simply net margin) measures how much net income
(profit) a company generates as a percentage of its revenue (sales).
This ratio helps investors assess management’s ability to generate profit from
sales while controlling costs. Expanding margins over time are desirable.

Table: showing Ratio Analysis

Particulars 2022-2023 2021-2022 2017-2018 2016-2017

Current Ratio 1.30 0.66 0.64 0.97
Cash Ratio 0.10 0.12 0.01 0.02
Debt Assest Ratio 0.19 0.22 0.26 0.20
Operating Profit Margin 0.26 -0.13 0.12 0.12
Net profit Margin 0.17 -0.13 0.08 0.07

Figure: Showing Ratio Analysis

Ratio Analysis
2022-2023 (Post GST) 2021-2022 2017-2018 2016-2017 (Pre GST)

1.40 1.30
1.20 0.97
1.00
0.80 0.66 0.64
0.60
0.40 0.19 0.22 0.26 0.20 0.26
0.10 0.12 0.12 0.12 0.17
0.20 0.01 0.02 0.08 0.07
0.00
-0.20
-0.40 -0.13 -0.13

Current Ratio Cash Ratio Debt Assest Ratio Operating Profit Net profit Margin
Margin

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Figure: Ratio Analysis just of Pre and Post GST

Ratio Analysis
1.40 1.30

1.20
0.97
1.00

0.80

0.60

0.40 0.26
0.19 0.20 0.17
0.20 0.10 0.12
0.07
0.02
0.00
Current Ratio Cash Ratio Debt Assest Ratio Operating Profit Net profit Margin
Margin

2022-2023 (Post GST) 2016-2017 (Pre GST)

Interpretation of the above Graph:

• Current Ratio:
Pre GST (2016-2017): The current ratio was very low at 0.10, indicating weak short-
term liquidity.
Post GST (2022-2023): The current ratio improved significantly to 1.30, suggesting
better liquidity management.
• Cash Ratio:
Both pre-GST and post-GST periods had very low cash ratios (around 0.02 to 0.03),
indicating minimal cash reserves relative to short-term liabilities.
• Debt Asset Ratio:
The debt asset ratio decreased slightly from an unspecified value in the pre-GST period
to just under that value in the post-GST period.
This suggests a moderate reliance on debt financing.
• Operating Profit Margin:
The operating profit margin increased from an unspecified value (around one-quarter)
pre-GST to approximately one-third post-GST.
This indicates improved profitability or cost management.
• Net Profit Margin:

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The net profit margin also increased from an unspecified value (around one-sixth) pre-
GST to about one-seventh post-GST.
This suggests better overall profitability.
(b) Trend Analysis
Trend Analysis of balance sheet involves calculation of percentage change in the
balance sheet items for number of successive years. This is carried out by taking
the items of the past financial year used as a base year and items of the year are
expressed as percentage of the base year.

Trend Analysis= Running Year/Base Year*100

Table: Showing Trend Analysis

Particulars 2022-2023(Post GSt) 2021-2022 2017-2018 2016-2017(Pre GST)

Capital Account 113% 101% 102% 100%
Debtors Account 124% 62% 120% 100%
Cash Equilents 471% 782% 67% 100%
Fixed Assest 112% 113% 129% 100%
Current Assets 145% 93% 92% 100%
Current Liablities 109% 138% 141% 100%

Figure: Trend Analysis

Trend Analysis
900%
800%
700%
600%
500%
400%
300%
200%
100%
0%
Capital Account Debtors Account Cash Equilents Fixed Assest Current Assets Current Liablities

2022-2023(Post GSt) 2021-2022 2017-2018 2016-2017(Pre GST)

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Figure: Trend Analysis of just Pre and Post GST

Trend Analysis
500% 471%
450%
400%
350%
300%
250%
200% 145%
150% 113% 100% 124% 112% 100% 109% 100%
100% 100% 100%
100%
50%
0%
Capital Account Debtors Account Cash Equilents Fixed Assest Current Assets Current Liablities

2022-2023(Post GSt) 2016-2017(Pre GST)

Interpretation of the above graph:

• Capital Account:
The capital account shows a 100% growth from the pre-GST period (2016-2017) to the
post-GST period (2022-2023).
This indicates an increase in capital investment or equity.
• Debtors Account:
The debtors account experienced a significant growth of 471% from pre-GST to post-
GST.
This suggests a substantial increase in outstanding receivables or customer credit.
• Cash Equivalents:
The cash equivalents remained relatively stable, with a slight increase of 50% from pre-
GST to post-GST.
Cash equivalents include short-term investments that can be quickly converted to cash.
• Fixed Assets:
Fixed assets saw a remarkable 112% growth from pre-GST to post-GST.
This indicates substantial investment in long-term assets such as property, plant, and
equipment.
• Current Assets:

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Current assets experienced a 145% growth from pre-GST to post-GST.
These assets include cash, receivables, and inventory.

• Current Liabilities:
Current liabilities remained relatively stable, with a 100% growth from pre-GST to post-
GST.
These liabilities include short-term debts and payables.
In summary, the trend analysis reveals significant changes in capital structure, debtor
management, and asset investments after the implementation of GST.

5.8 Questionnaire Analysis

Conducted a Sample Survey within the company with the sample size of 28,
to get to know the Impact of GST on the Hotel Industry. The Sample Profile
includes the:
(a) Age Group:

Interpretation: The survey captures a diverse age range, with a focus on

young adults (23-27) and professionals in their late twenties and early thirties.

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Interpretation: The chart shows that the largest percentage of respondents,
67.9%, were aware of the GST implications on the hotel industry. 17.9% of
respondents said no, and 14.3% said maybe.

Interpretation: The overall interpretation of the pie chart is that the

implementation of GST in India has had a mixed impact on people’s frequency
of visits to hotels in that country. 28.6% of respondents said their visits increased;
35.7% of respondents said their visits decreased; 35.7% of respondents said there
was no change.
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Interpretation: The overall interpretation of the image is that nearly half, 46.4%,
of the 27 people surveyed believe GST has made hotel services more expensive
for customers in India, 25% said maybe, and 28.6% said no.

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 RECOMMENDATIONS

Based on the above data, it appears that a significant majority of those surveyed
are aware of how GST applies to the hotel industry in India. However, it is
important to note that this is a small sample size, and the results may not be
generalizable to the wider population.

➢ Most of the respondents of the survey believes that with the

implementations of the GST the customers have decreased their visits as
Hotels Rates becomes more expensive.
➢ But with the implementation of the GST the hotels rates become cheaper
than the pre-GST taxes.
➢ The tax slab of GST is:
0-1000: 12%
1000-7500: 12%
More than 7500: 18%
➢ This tax of the GST makes the hotels rate cheaper than multiple and
complex tax regime.

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 CONCLUSION

It can be concluded that the Introduction of the GST is a major step taken by the
Government of India. Hospitality industry is a versatile field encompassing
accommodation, accounting, foods and beverages, event management and above all
guest satisfaction.
❖ This industry faces the multiple ta regime and a victim of tax over tax. GST will
help reduce the multiple taxation given a significant boost to hospitality sector.
❖ The hotels VAT rate on rooms is 18.4% - 14.5% plus Luxury Tax 10% and service
tax 2.5%. The effect of GST will positively be leading to a considerable reduction
of taxes 12% - 18% respectively.
❖ As per section 10(1)(b) of CGST/SGST act, the services offered by hotels with
restaurants whose aggregate turnover in previous financial year does not exceed
50 lakhs shall pay 2.5% as CGST and 2.5% as SGST, totaling to 5% under
composition scheme. The composition restaurant suppliers will not entitle to
input tax credit.
Thus, finally we can say that, Hotels sector is always a priority by the Government.
Hotel industry including tourism contributes 6.23% of national GDP and 8.78% of
total employment the country. This industry will definitely help in building the
nation and is going beyond the borders.
Due to GST billing system are very easy and customer are satisfied with the original
bill. Customer have shown the original bill with taxes applicable on the food and
they are satisfied with that. After the GST hotel industry have much more developed
and customers are trusted on the hotels.

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 ATTACHMENTS

Calculations of the Ratios of EIH Ltd.

Computation of Ratios of EIH Ltd.
Particulars As on 31-03-2023 As on 31-03-2022 As on 31-03-2018 As on 31-03-2017
Current Ratio = Current Asset/Current Liabilities
Current Assets 5,096.49 3,266.11 3,238.38 3,506.30
Current Liabilities 3,929.66 4,971.76 5,095.03 3,611.53
Current Ratio 1.30 0.66 0.64 0.97
Cash Ratio = (Cash and Cash Equivalents + Current Investment)/ Current Liabilities
Cash and Cash Equivalents 320.14 530.95 45.8 67.9
Current Investment 77.13 89.39 0 0
Current Liabilities 3,929.66 4,971.76 5,095.03 3,611.53
Cash Ratio 0.10 0.12 0.01 0.02
Debt Asset Ratio = Total Debt/Total Assests
Total Debt 7,351.25 8,151.17 9,664.84 7,110.05
Total Assets 38,532.81 36,233.46 37,823.51 34,791.61
Debt Assest Ratio 0.19 0.22 0.26 0.20
Operating Profit Margin = Operating Profit/ Sales
Operating Profit 4,812 -1,188 1,739 1,661
Sales 18,358 9,108 14,340 13,768
Operating Profit Margin 0.26 -0.13 0.12 0.12
Net Profit Margin = Net Profit/ Net Sales
Net Profit 3,202 -1,182 1,123 965
Sales 18,358 9107.58 14340.43 13767.75
Net profit Margin 0.17 -0.13 0.08 0.07

Questionnaire

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 REFERENCES

• https://www.dealsquard.com/
• https://www.mordorintelligence.com/industry-reports/hospitality-industry-in-india
• https://www.linkedin.com/pulse/global-hospitality-market-size-2023-2030-industry-
6tz0f/
• https://www.raijmr.com/ijrhs/wpcontent/uploads/2021/05/IJRHS_2021_vol09_issue_
5_Eng_02.pdf
• https://www.slideshare.net/DheerajAgarwal18/project-report-impact-of-gst-on-hotel-
industry
• https://www.jetir.org/papers/JETIR2307262.pdf
• https://www.gst.gov.in/
• https://www.mordorintelligence.com/industry-reports/hospitality-industry-in-
india/market-size

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