Impact of GST on Private Hajj and Umrah Pilgrimages

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August 13, 2019

GST on Hajj and Umrah

The Goods and Services Tax (GST), which was officially unveiled in July 2017 in India, is applicable to a range of products and services supplied throughout the country. Even though most of the pilgrimage tours, including Amarnath Yatra, have been exempt from GST, there is a 5% tax on private hajj tour packages. This has created problems for the Muslim community of India.

Before the implementation of GST, there was no service tax levied on Hajj and Umrah pilgrimages. The cost of Hajj Yatra only involved the travel and other related costs.

Hajj Pilgrimage under GST

After the launch of GST, the government decided to put Hajj and Umrah tour services and packages offered by private companies under the tax bracket. That means a five percent tax will be charged on such services. This has not been a welcome move in the Muslim community of the country, especially because many other pilgrimages have been kept free of GST.

However, one should understand that the tax is not actually being levied on the Hajj and other pilgrimages. It is only applicable to the involved services such as airfare, hotel stays, etc. which are already under GST ambit. Therefore, they are naturally taxable. The service tax (GST) is applicable to private Hajj and Umrah packages only.

All the specified pilgrimages offered by a government-registered trust or any other religious bodies are however exempted from the tax. Similarly, the Hajj pilgrimage that is offered by government and/or State Haj Committees are also being treated zero-rated under GST. It means there is no tax on government-provided Hajj tours.

GST Rate on Hajj and Umrah Pilgrims

It is being estimated that the added tax on private Hajj tours will increase the cost burden on Hajj and Umrah travellers. Before GST, the state government of Kashmir had exempted Hajj tour packages from the service tax. But now, private tour operators are forced to charge GST on their full packages. A hajj package that normally costs around Rs. 4 lakh will now cost Rs. 20,000 more after the implementation of GST on it.

Recommended: GST on Tourism Industry in India

Hajj Yatra to restart through Waterways

The government of India has recently signed a contract with the Saudi government to reopen the possibility of performing Hajj pilgrimage through water ships. The earlier Hajj trips, before 1995, used to involve travels from Mumbai to Jeddah through waterways. The approx distance through water is 2300 miles and the cost is less as compared to air travels. The service has already been accepted by both governments and it is expected to begin in the coming years.

Government Withdraws Subsidy on Hajj Pilgrimage

The Indian government has recently decided to end subsidy given on the Hajj pilgrimage to Indian Muslims. The money saved through this will be used on the empowerment of the minor communities, particularly girls, of India in education and employment sectors. The subsidy amount given on annual Hajj pilgrimage is around Rs. 500-700 crore. The short impact of this move may be seen in terms of increased cost of Hajj tours.

Also Read: Latest GST News and Updates

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