The Karnataka State Travel Operators Association (KSTOA) is strongly protesting the new Goods and Services Tax (GST) 2.0 reforms. These changes unfairly leave out mid-sized multi-purpose vehicles (MPVs) and sport utility vehicles (SUVs) from the beneficial tax concessions, a decision that has sparked significant concern.
In an official letter sent to the Union Finance Ministry, KSTOA highlighted that categorizing these essential tourism vehicles as luxury passenger cars is a ‘grave injustice’ to the entire travel and tourism sector.
The Burden of Misclassification
KSTOA President K. Radhakrishna Holla warned that excluding these popular mid-sized MPVs and SUVs, which are vital for tourism, will severely hurt travel businesses. He emphasized, ‘Labeling these vehicles as luxury cars instead of crucial tourism fleet vehicles is a profound injustice. They are currently subject to a hefty 40% tax, placing an immense financial strain on mid-segment travel operators. This, in turn, drives up operational costs, increases passenger fares, and ultimately stunts the growth of the tourism industry as a whole.’
Mr. Holla appealed to both the Union Finance Ministry and the Fitment Committee to acknowledge mid-sized passenger vehicles as the ‘true workhorses of Indian tourism’ and grant them the necessary tax benefits. He stressed that ‘GST 2.0 should aim to provide clear and fair tax advantages across all industries. The mid-segment travel sector must not be ignored. We implore the Finance Ministry to reassess this situation without delay.’
Adding his voice to the association’s call, Manjunath K.R., an SUV cab driver from Rajajinagar serving Bengaluru airport and outstation routes, explained that these reforms directly impact drivers’ livelihoods. He noted, ‘Most tourists opt for larger vehicles for their comfort and luggage capacity. However, steep taxes force operators to charge higher rates, making passengers reluctant to book. If larger vehicles also received tax benefits, drivers like me would secure more regular trips and earn a better income.’
Despite their objections, the association did commend the GST 2.0 announcement of an 18% concessional tax rate for vehicles under 1200cc or 4000mm in length. They hailed this as a ‘real boost’ for owners of smaller vehicles and specific areas of the tourism industry.