Houseboat rides in the famed backwaters of Kerala — top on the bucket list of most travelers — have got more expensive under the new GST regime and has become a cause of concern for operators who are facing stiff competition from cheaper destinations like Sri Lanka and Thailand. Tour operators say houseboats are unique products which offer bundled services like guided cruise, food and accommodation. “Taxing the products in the luxury category at the highest rate of 28% would drive away the foreign tourists to destinations other than India.The industry has already been reeling under the impact of demonetisation and liquor ban on highways,” officials of Kerala Travel Mart (KTM) Society, a leading tourism body of Kerala, said.
Earlier, the houseboat operators came under the category of tour operators and had to pay 9% as service tax with input credit, Jobin J Akkarakalam, secretary of Kerala House Boat Owners Federation, told FE. Before January 2017, the service tax on tour operators stood at 5% without input credit. “With GST, houseboats are not under the tour operators list and some are of the view that we automatically qualify for the 18% tax bracket. However, some tax experts say houseboats come under the luxury category and the tax would come to 28 %,” he said.
“Tax officials are holding different views whether it should be 18% or 28%. Some say if the room rent exceeds Rs 7,500 per night, it is bracketed in the highest rate of 28 %,” Jose Mathew of Rainbow Cruises said and added that it would make the sector unviable.
Under GST, in the hospitality industry, the highest slab of 28% tax has been reserved for luxury hotel accommodation which can be defined as the one with tariffs above Rs 7,500 per day.
There are approximately 1,500 house boats plying in the Vembanad Lake between Alapuzha and Kumarakam in Kottayam. An average houseboat with one-room would cost between Rs 15,000 and Rs 18,000 per day, while a two-bedroom houseboat would charge Rs 25,000-28,000 and a three-bedroom boat Rs 35,000-38,000. The tariffs vary on the basis of seasonal demand and onboard luxury, which may include conference rooms, dance floors and Jacuzzi.
Sunil J, operations manager of Muthoot Leisure and Hospitality Services, added that the confusion is worrying and the tariffs charged have been hiked by all operators. “We have hiked the tax to 18 from 9% charged earlier. Since the daily tariffs for our boats exceed Rs 15,000 per day, we are worried that we may have to charge higher. We can only claim input credit on the frozen foods as fuel is outside GST. Fuel, labour and food are the major costs involved in the daily operations,” he added.
Jobin says the tax officials are considering the houseboats in Kerala on a par with the ones in Kashmir, which are stationary and more like hotel rooms. Houseboats in Kerala offer day long cruise and needs more fuel and maintenance.
There are nearly 4,500-5,000 people working directly in the houseboat industry, while the number of people dependent on the industry would be larger. The operators source fish, egg and other inputs from the local economy and also provide income for services like local travel, handicrafts and entertainment.