Hotel stocks rally up to 13% on GST rate cut

NEW DELHI: Shares of hotel industry rallied up to 13 per cent in early trade on Monday after the GST Council last week cut tax rate on hotel room tariffs.

With an objective to give boost to the hospitality sector, the government on Friday cut the GST (goods and services tax) rate on hotel rooms with tariffs of up to Rs 7,500 per night to 12 per cent from the existing 18 per cent.

Likewise, the tax on room tariff of above Rs 7,500 has been slashed to 18 per cent from the existing 28 per cent.


There will be no GST on room tariffs of below Rs 1,000 per night.

Cheering the development, shares of Royal Orchid was trading nearly 13 per cent higher at Rs 92 in the early trade, while benchmark BSE Sensex was up nearly 945 points, or 2.50 per cent, at Rs 944. Advani Hotels, Lemon Tree Hotels, Indian Hotels and TajGVK Hotels were up between 7 per cent and 9 per cent.

Hotel Leelaventure, Chalet Hotels and EIH were also up by over 2 per cent each.

Overall, market sentiment remained positive after Finance Minister on Friday delivered a surprise cut in corporate tax rates.

Announcing the latest set of measures to jump-start flagging growth, Nirmala Sitharaman slashed the base corporate tax for existing companies to 22 per cent from 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, to 15 per cent from 25 per cent.