FHRAI Demands Major GST Relief for Hospitality Sector

FHRAI Demands Major GST Relief for Hospitality Sector

The Federation of Hotel and Restaurant Associations of India (FHRAI) has called on the Finance Minister for urgent and extensive Goods and Services Tax (GST) reforms to provide significant financial relief to the hospitality sector.

Key Demands for GST Relief

• Regularization of Past Dues: FHRAI urged the government to implement a mechanism for the regularization or amnesty for long-pending, disputed past GST dues. This measure would provide finality to disputes and safeguard the sector from retrospective tax liabilities.
• Restoration of Input Tax Credit (ITC): The association sought the restoration of full ITC benefit. The current structure, which denies ITC, forces the industry to absorb taxes paid on construction, maintenance, and supplies as costs. FHRAI argues this raises the effective price for consumers and hinders global competitiveness.
• Delinking of F&B Rates from Room Tariffs: FHRAI demanded that the GST rate for Food & Beverage (F&B) services in hotels be delinked from the room tariff classification. This addresses the issue where restaurants inside hotels with high room tariffs are subjected to a higher GST rate (e.g., 18%), which acts as a deterrent to dining at organized hotel outlets.

Context and Sectoral Impact

The overall plea is for a stable, rationalized, and simplified GST framework that makes India a more attractive and competitive destination for both domestic and international tourists by ensuring tax policies support the sector’s growth rather than burdening it with accumulated costs.