New tax to make Karnataka holiday's costlier

Planning for a holiday in Karnataka this year? It is going to cost you more than ever. The central government is revising service tax rate for packaged tours that are booked via travel and tour agencies which will increase the tax by about 20%, and it is the customers who will have to bear the cost.

Earlier an additional 9% service tax has been levied which will be effective from January 22, and now the travellers will also have to pay for handling charges for transportation and food arrangement that will add another 10% on the packaged trips booked via various operators in Karnataka. This handling charge is different in different states. 

This newly revised service tax will impact the state tour operators and the travellers looking to book for long trips the most. Whereas, the online operators will have a lesser impact since on online booking there will be no additional service charge. 

In next two months, there is summer vacation and according to a report in The Hindu, the tour operators are hopeful that the new taxes will have no impact on the booking. However, in long term, there will be a significant impact from the customers’ side. 

Online tour operators are already gaining big time post demonetisation, and this new service tax will further boost their business. However, online booking works well for short trip. But, longer trips, family vacations, and group trips often requires the expertise of tour operators and the newly revised service tax is expected to hit this particular segment of tourism in Karnataka. 

The currency ban already affected the tourism sector in the state adversely and the peak season of November and December saw a drastic decline of travellers in the state. Now, the revised tax will enhance the struggle of this sector.  

Post demonetisation, people, in general, has resorted to wait and watch policy, therefore such enhance taxes and anticipation of upcoming budget are expected to cause some distress among people. This year the year with 11 long weekends, but it seems people might have apprehensions about planning vacations. 

• Karnataka tourism
• Tour packages